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An analysis of the demand for skill in a growing economy

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  • Beladi, Hamid
  • Marjit, Sugata
  • Weiher, Kenneth

Abstract

We construct a trade theoretic model of skill formation with skill as a produced intermediate input. Capital is required for production as well as for education which transforms unskilled labor into skilled. We use this model to reflect analytically on India's rising requirement of skilled manpower. We show that even if growth of capital and supply of skilled manpower match, relative stagnation of unskilled manufacturing sector will magnify the gap between growth in demand and supply of skill. This may happen, for example, if there is a vast pool of workforce who may not have even the basic education to qualify as "unskilled" and excessive capital flows into the skilled sector. Thus a country with lack of education at a very basic level will be forced to import skilled manpower from the rest of the world.

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Bibliographic Info

Article provided by Elsevier in its journal Economic Modelling.

Volume (Year): 28 (2011)
Issue (Month): 4 (July)
Pages: 1471-1474

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Handle: RePEc:eee:ecmode:v:28:y:2011:i:4:p:1471-1474

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Web page: http://www.elsevier.com/locate/inca/30411

Related research

Keywords: Skill formation Growth Capital allocation;

References

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  1. Robert J. Barro & N. Gregory Mankiw & Xavier Sala-i-Martin, 1995. "Capital Mobility in Neoclassical Models of Growth," NBER Working Papers 4206, National Bureau of Economic Research, Inc.
  2. Toru Kikuchi & Ngo Van Long, 2009. "A Simple Model of Service Offshoring with Time Zone Differences," Discussion Papers 0916, Graduate School of Economics, Kobe University.
  3. Mehtabul Azam, 2007. "India’s Increasing Skill Premium: Role of Demand and Supply," Departmental Working Papers 0710, Southern Methodist University, Department of Economics.
  4. Kar, Saibal & Beladi, Hamid, 2004. "Skill formation and international migration: welfare perspective of developing countries," Japan and the World Economy, Elsevier, vol. 16(1), pages 35-54, January.
  5. Gu Wei & Shigemi Yabuuchi, 2006. "Imperfect Labor Mobility and Unemployment in a Dual Economy," Review of International Economics, Wiley Blackwell, vol. 14(4), pages 698-708, 09.
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  8. Amador, João & Cabral, Sónia, 2009. "Vertical specialization across the world: A relative measure," The North American Journal of Economics and Finance, Elsevier, vol. 20(3), pages 267-280, December.
  9. Findlay, Ronald & Kierzkowski, Henryk, 1983. "International Trade and Human Capital: A Simple General Equilibrium Model," Journal of Political Economy, University of Chicago Press, vol. 91(6), pages 957-78, December.
  10. Saibal Kar & Basudeb Guha-Khasnobis, 2006. "Economic Reform, Skill Formation and Foreign Capital," The World Economy, Wiley Blackwell, vol. 29(1), pages 79-94, 01.
  11. Chakrabarti, Avik, 2004. "Asymmetric adjustment costs in simple general equilibrium models," European Economic Review, Elsevier, vol. 48(1), pages 63-73, February.
  12. Marjit, Sugata & Kar, Saibal, 2005. "Emigration and wage inequality," Economics Letters, Elsevier, vol. 88(1), pages 141-145, July.
  13. Kar, Saibal & Marjit, Sugata, 2009. "Urban informal sector and poverty," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 631-642, October.
  14. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  15. Ronald W. Jones & Sugata Marjit, 2001. "The Role of International Fragmentation in the Development Process," American Economic Review, American Economic Association, vol. 91(2), pages 363-366, May.
  16. Reza Oladi, 2005. "Stable Tariffs and Retaliations," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 205-215, 05.
  17. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2010. "Skilled-Unskilled Wage Inequality And Urban Unemployment," Economic Inquiry, Western Economic Association International, vol. 48(4), pages 997-1007, October.
  18. Marjit, Sugata & Beladi, Hamid, 1999. "Complementarity between Import Competition and Import Promotion," Journal of Economic Theory, Elsevier, vol. 86(2), pages 280-285, June.
  19. Jones, R.W. & Marjit, S., 1992. "International Trade and Endogenous Production Structures," RCER Working Papers 312, University of Rochester - Center for Economic Research (RCER).
  20. Reza Oladi, 2004. "Strategic quotas on foreign investment and migration," Economic Theory, Springer, vol. 24(2), pages 289-306, August.
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