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Engines of the Skill Premium in the Portuguese Economy

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  • Manuel Carlos Nogueira
  • Óscar Afonso

Abstract

The explanation of the recent increase in intra-country wage inequality in favour of skilled labour has been dominated by two explanations: skill-biased technological change and international trade liberalization. Few empirical studies have tried to assess both explanations across a comprehensive sample of sectors for individual countries. Thus, we analyse the impact of both explanations and add some new variables within a unified framework that isolates 18 sectors of the Portuguese economy for the period 2007–2017. In particular, results show that the exports, imports, and the relative supply of skilled workers present a negative impact on the Portuguese sectoral wage skill premium (IWSP), thus reducing wage inequality, whereas revenues and foreign direct investment positively affect the Portuguese IWSP. Also, we observe that the international trade is far more important than the technological progress, to reduce the wage gap between skilled and unskilled workers.

Suggested Citation

  • Manuel Carlos Nogueira & Óscar Afonso, 2019. "Engines of the Skill Premium in the Portuguese Economy," CESifo Economic Studies, CESifo Group, vol. 65(3), pages 318-341.
    • Handle: RePEc:oup:cesifo:v:65:y:2019:i:3:p:318-341.
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    File URL: http://hdl.handle.net/10.1093/cesifo/ifz007
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    References listed on IDEAS

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    Cited by:

    1. Mara Madaleno & Manuel Carlos Nogueira, 2023. "How Renewable Energy and CO 2 Emissions Contribute to Economic Growth, and Sustainability—An Extensive Analysis," Sustainability, MDPI, vol. 15(5), pages 1-15, February.

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    More about this item

    Keywords

    skill-biased technological change; international trade; gross fixed capital formation; skilled labour supply and demand; wage inequality;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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