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Skill-biased technological change and wage inequality in developing countries

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  • Pi, Jiancai
  • Zhang, Pengqing

Abstract

This paper theoretically examines how skill-biased technological change influences the skilled-unskilled wage inequality in developing countries. In the basic model, we find that in a two-sector economy with full employment, an increase in the magnitude of skill-biased technological change will expand the skilled-unskilled wage inequality if the labor's distributive share in the skilled sector is large enough relative to that in the unskilled sector. When we extend the basic model by taking different characteristics into consideration, we find that an increase in the magnitude of skill-biased technological change will conditionally in a way similar to that in the basic model or unconditionally widen the wage inequality.

Suggested Citation

  • Pi, Jiancai & Zhang, Pengqing, 2018. "Skill-biased technological change and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 56(C), pages 347-362.
    • Handle: RePEc:eee:reveco:v:56:y:2018:i:c:p:347-362
    DOI: 10.1016/j.iref.2017.11.004
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    More about this item

    Keywords

    Skill-biased technological change; Skilled-unskilled wage inequality; General equilibrium approach; Labor market structure; Developing countries;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • 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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