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Skill-Biased Technological Change, Unemployment, And Brain Drain

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  • Harald Fadinger
  • Karin Mayr

Abstract

We develop a model of directed technology adoption, frictional unemployment, and migration to examine the effects of a change in skill endowments on the wages, employment rates, and emigration rates of skilled and unskilled workers. We find that, depending on the elasticity of substitution between skilled and unskilled workers and the elasticity of the matching function, an increase in the skill ratio can reduce both the relative unemployment rate and the relative emigration rate (brain drain) of skilled workers. We provide numerical simulations to support our findings and show that the effects are empirically relevant and potentially sizable.

Suggested Citation

  • Harald Fadinger & Karin Mayr, 2014. "Skill-Biased Technological Change, Unemployment, And Brain Drain," Journal of the European Economic Association, European Economic Association, vol. 12(2), pages 397-431, April.
  • Handle: RePEc:bla:jeurec:v:12:y:2014:i:2:p:397-431
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    Cited by:

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    2. Cords, Dario & Prettner, Klaus, 2018. "Technological unemployment revisited: Automation in a search and matching framework," Hohenheim Discussion Papers in Business, Economics and Social Sciences 19-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    3. Roxana Idu, 2019. "Source Country Economic Development and Dynamics of the Skill Composition of Emigration," Economies, MDPI, Open Access Journal, vol. 7(1), pages 1-18, March.
    4. Dimitrios Exadactylos & Massimo Riccaboni & Armando Rungi, 2019. "Talents from Abroad. Foreign Managers and Productivity in the United Kingdom," Working Papers 01/2019, IMT School for Advanced Studies Lucca, revised Dec 2019.
    5. Leite, Duarte N. & Afonso, Óscar & Silva, Sandra T., 2019. "A tale of two countries: Directed technical change, trade and migratory movements," Economic Modelling, Elsevier, vol. 83(C), pages 173-194.
    6. Gil, Pedro Mazeda & Afonso, Oscar & Brito, Paulo, 2019. "Economic growth, the high-tech sector, and the high skilled: Theory and quantitative implications," Structural Change and Economic Dynamics, Elsevier, vol. 51(C), pages 89-105.

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    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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