How Important is Human Capital for Development? Evidence From Immigrant Earnings

The O-Ring Sector and the Foolproof Sector: An Explanation for Cross-Country Income Differences

“…The y-axis reports values for uws i, the unmeasured worker skill estimate for immigrants from country i, as estimated in Hendricks (2002). uws i is the log average wage of immigrants for country i, adjusting for age and education.…”

Skill-Biased Technological Change and Endogenous Labor Supply in EU Transition Economies and the US

“…The following study motivates that the economic environment has an important effect on the productivity. Hendricks (2002) analyzes the output differences among countries by looking at wages of immigrants in the US. He strongly rejects the hypothesis that human and physical capital differences create the main part of the income gap.…”

People Flows in Globalization

“…This calculation is supported by other findings. Hendricks (2002) approximates earnings of workers by real GDP per capita and estimates that, after taking account of differences in years of schooling and physical capital, there remain differences in earnings between immigrants in the US and persons in the low wage countries from which they came of a multiple of five to eight. I (2001, 2003) use the Occupational Wages Around the World data file, which contains estimates of wage rates in 161 detailed occupations in over 150 countries, to estimate the relation between capital-output ratios, average years of schooling, and indicators of the efficacy of competitive markets (from the Fraser Institute Economic Freedom data file) and earnings in the same detailed occupations 7 Let the production function be: Y= K L 1-, where output is Y, capital is K, labor is L, and where capital's share of output is , and labor's share of output is 1-, Differentiate with respect to labor to get the marginal product of labor, dy/dL = (K/L) , and assume that the wage equals the marginal product Then if K/L is 8 times larger in high-income countries, the wage will be 8 times larger.…”