Comparative Advantage, Relative Wages, and the Accumulation of Human Capital
AbstractI apply Ricardoâs principle of comparative advantage to a theory of factor substitutability in a model with a continuum of worker and job types. Highly skilled workers have a comparative advantage in complex jobs. The model satisfies the distance‐dependent elasticity of substitution (DIDES) characteristic: substitutability between types declines with their skill distance. I analyze changes in relative wages due to human capital accumulation. The concept of a complexity dispersion parameter or compression elasticity is introduced. Empirical studies suggest its value to be equal to two: a 1 percent increase in the stock of human capital reduces the Mincerian return by 2 percent. See the publication in Journal of Political Economy , 2005, 113(2), 425-461.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-081/3.
Date of creation: 14 Aug 2002
Date of revision: 08 Apr 2005
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Web page: http://www.tinbergen.nl
assignment; wage distribution; human capital.;
Other versions of this item:
- Coen N. Teulings, 2005. "Comparative Advantage, Relative Wages, and the Accumulation of Human Capital," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 425-461, April.
- D30 - Microeconomics - - Distribution - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-02 (All new papers)
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