Skills Distribution, Migration and Wage Differences in Pure Service-Exchange Economy
AbstractThis paper considers an economy with skilled agents exchanging their services. Using Cobb-Douglas preferences, the paper shows that there exists an optimal (average welfare maximizing) skills' distribution. This optimal distribution is independent of productivity and is welfare equalizing. If the skill-distribution is not optimal, then some agents are better-off than others. In such a scenario, migration in some sectors is average-welfare improving while inviting skilled-agents in others reduces average welfare. "Productivity increase of worse-o sector" without changing the overall skills' composition of economy increases the wage gap.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 9000.
Date of creation: Jun 2007
Date of revision:
Find related papers by JEL classification:
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
- L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-06-13 (All new papers)
- NEP-HRM-2008-06-13 (Human Capital & Human Resource Management)
- NEP-LAB-2008-06-13 (Labour Economics)
- NEP-MIG-2008-06-13 (Economics of Human Migration)
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