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Skill Supply and Biased technical change

  • Patricia Crifo

    (Department of Economics, Ecole Polytechnique - Polytechnique - X - CNRS)

This article contributes to the debate on skill-biased technical change by studying the dynamics of skill supply and wage inequality in an endogenous growth model with ability-biased technical progress. Due to a discouragement effect, rising within groups inequality reduces incentives to become educated for ordinary-ability workers. This mechanism generates a non-monotonic relationship between the growth rate and skill supply driving wage inequality upward during periods of accelerating technical change. This theoretical explanation is consistent with the apparent negative relationship between the relative skill supply and premium in the 1970s and 1980s in major OECD countries.

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Paper provided by HAL in its series Post-Print with number hal-00243031.

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Date of creation: 2008
Date of revision:
Publication status: Published in Labour Economics, Elsevier, 2008, 15, pp.818-830. <10.1016/j.labeco.2007.07.002>
Handle: RePEc:hal:journl:hal-00243031
DOI: 10.1016/j.labeco.2007.07.002
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