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Structural change and the skill premium in a global economy

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  • Xu, Yang

Abstract

We develop a multi-country general equilibrium model with structural change to investigate the factors affecting the global changes in the skill premium between 1997 and 2007. Trade and technological change increase the skill premium by inducing reallocations to skill-intensive sectors. We apply our three-sector framework to 37 countries, and the model accounts completely for countries’ trade, sales, consumption, and skill premium in terms of different types of fundamental shocks. Technological changes, both skill biased and Hicks neutral, account for most of the increases in the skill premium. The effects of Hicks-neutral total factor productivity growth act through structural change.

Suggested Citation

  • Xu, Yang, 2022. "Structural change and the skill premium in a global economy," Journal of Economic Dynamics and Control, Elsevier, vol. 138(C).
    • Handle: RePEc:eee:dyncon:v:138:y:2022:i:c:s0165188922000690
    DOI: 10.1016/j.jedc.2022.104364
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    More about this item

    Keywords

    Trade; Technological change; Structural change; Skill premium;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology

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