The Demand-Supply-Demand Twist: How the Wage Structure Got More Convex
AbstractIn the 1990s, in many countries, log wages became a more convex function of education: returns to college increased and returns to intermediate education declined. This paper argues that an important cause of this convexi cation was a two-stage demand-supply interaction: an increased demand for both sorts of educated workers stimulated a supply response; the increased supply of intermediate-educated further increased the demand for college-educated workers, because these two types of labour are complementary. This argument is supported by an empirical equilibrium model of savings and educational choices for Mexico, where the degree of convexi cation was ampli ed by loosening credit constraints.
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Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 48_09.
Date of creation: Jan 2009
Date of revision: Jan 2009
Wage Inequality; Human Capital; Empirical Equilibrium Model; Latin America;
Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
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- Vincenzo Caponi, 2011.
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