The Demand-Supply-Demand Twist: How the Wage Structure Got More Convex
In the 1990s, in many countries, log wages became a more convex function of education: returns to college increased and returns to intermediate education declined. This paper argues that an important cause of this convexi cation was a two-stage demand-supply interaction: an increased demand for both sorts of educated workers stimulated a supply response; the increased supply of intermediate-educated further increased the demand for college-educated workers, because these two types of labour are complementary. This argument is supported by an empirical equilibrium model of savings and educational choices for Mexico, where the degree of convexi cation was ampli ed by loosening credit constraints.
|Date of creation:||Jan 2009|
|Date of revision:||Jan 2009|
|Contact details of provider:|| Postal: |
Web page: http://www.rcfea.org
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:rim:rimwps:48_09. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marco Savioli)
If references are entirely missing, you can add them using this form.