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Rising skill premia; you ain't seen nothing yet?

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  • Richard Nahuis
  • Henri de Groot

Abstract

Increases in inequality between low and high-skilled workers are likely to affect welfare state policies in upcoming decades. Demand for redistribution puts pressure on marginal income-tax rates and other social security measures. Increases in inequality between low and high-skilled workers are likely to affect welfare state policies in upcoming decades. Demand for redistribution puts pressure on marginal income-tax rates and other social security measures. We come to this conclusion by confronting expected supply and demand for skill. If demand for skill continues to increase at the pace of the last decades, supply has to keep up its high rate of growth of the last decades too. A priori, the former is plausible, the latter is not. This paper makes this point and sketches the major uncertainties surrounding the underlying trends.

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  • Richard Nahuis & Henri de Groot, 2003. "Rising skill premia; you ain't seen nothing yet?," CPB Discussion Paper 20, CPB Netherlands Bureau for Economic Policy Analysis.
    • Handle: RePEc:cpb:discus:20
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    1. Heckman, James J. & Jacobs, Bas, 2009. "Policies to Create and Destroy Human Capital in Europe," IZA Discussion Papers 4680, Institute of Labor Economics (IZA).
    2. Rob Alessie & Agar Brugiavini & Guglielmo Weber, 2006. "Saving and Cohabitation: The Economic Consequences of Living with One's Parents in Italy and the Netherlands," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 413-457, National Bureau of Economic Research, Inc.
    3. Stefan Groot, 2011. "Wages in the Netherlands: a Micro Approach," ERSA conference papers ersa10p1526, European Regional Science Association.
    4. Henri L.F. de Groot & Richard Nahuis & Paul J.G. Tang & John Fitz Gerald, 2006. "Is the American Model Miss World? Choosing Between the Anglo-Saxon Model and a European-Style Alternative," Chapters, in: Susanne Mundschenk & Michael H. Stierle & Ulrike Stierle-von Schütz & Iulia Traistaru-Siedschlag (ed.), Competitiveness and Growth in Europe, chapter 6, Edward Elgar Publishing.
    5. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper 252.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Wim Suyker & Henri de Groot, 2006. "China and the Dutch economy," CPB Document 127, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Weiss, Matthias, 2008. "Skill-biased technological change: Is there hope for the unskilled?," Economics Letters, Elsevier, vol. 100(3), pages 439-441, September.
    8. Semih Akcomak & Henri de Groot & Stefan Groot, 2013. "The impact of trade, offshoring and multinationals on job loss and job finding," CPB Discussion Paper 252, CPB Netherlands Bureau for Economic Policy Analysis.
    9. R. Nahuis & H. van der Wiel, 2005. "How Should Europe’s ICT Ambitions look like? An Interpretative Review of the Facts," Working Papers 05-22, Utrecht School of Economics.
    10. Stefan Groot & Henri de Groot, 2011. "Wage inequality in the Netherlands: Evidence, trends and explanations," CPB Discussion Paper 186, CPB Netherlands Bureau for Economic Policy Analysis.
    11. Wim Suyker & P. Buitelaar & Henri de Groot, 2007. "India and the Dutch economy; stylised facts and prospects," CPB Document 155, CPB Netherlands Bureau for Economic Policy Analysis.

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    JEL classification:

    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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