Increasing dispersion of skills and rising earnings inequality

In recent decades many countries have simultaneously liberalized their trading regimes and expanded their education systems. The theoretical effect of these regime shifts on the wage differential between skilled and unskilled workers is ambiguous. On the one hand, openness to trade causes demand shifts in the labor market which may widen or narrow the differential. This result depends on whether the unskilled wage is depressed, as in the case of importing countries, or raised, as in the case of exporting countries. On the other hand, an increased supply of more educated workers reduces their wages and narrows the skill wage gap. In this study of the labor market of Hong Kong, we document that recent changes in response to the trade liberalization of Mainland China and expanded access to education have increased the earnings differential between skilled and unskilled workers. Using detailed census data, we argue that the main reason for this outcome is the widened dispersion of skills across the earnings distribution, resulting from demand and supply shifts in the labor market caused by trade openness and expanded access to higher education.     

Impact of Chinese growth and trade on labor in developed countries

This paper examines the impacts of growth in China's economy and trade on the skill premium of labor in developed countries. We utilize a unique global dataset that disaggregates workers by occupations to identify impacts across labor categories with different skill sets, complementing the widely used GTAP Data Base in the CGE framework offered by the GTAP model. To study the impacts of China's fast-paced growth, we model the counterfactual, i.e., what if China grew and opened at a more modest rate; we then compare this baseline with China's actual growth. Results indicate that a strong rise in manufacturing exports from China to the US impacts output and employment in the US. The US shifts its production away from light manufacturing sectors to more service-oriented sectors that also tend to engage higher skilled labor. There is a small decrease in the real wages of unskilled labor and a rise in the real wages of skilled labor. Interestingly, not all categories of unskilled labor lose, rather those that are more directly linked with manufacturing sectors are impacted; unskilled ‘service and shop workers’ and the unskilled ‘agricultural workers, machine operators, assemblers, craft workers, and others’ observe a small decline in real wages, while the impact on unskilled ‘clerks’ is insignificant. For all categories of skilled workers, there is an increase in real wages primarily driven by the shift in production to services and high-skilled labor intensive categories, resulting in the rising skill premium. Hence disaggregating the labor data provides greater depth on the understanding of the differential impacts on domestic workers resulting from trade, and thereby guides policy on how these differential impacts can be smoothed through redistribution of benefits. Consistent with other study findings, there is a positive impact on overall growth and welfare in the US, EU and Australasia.     

Intra‐industry Trade Liberalization: Why Skilled Workers are More Likely to Support Free Trade

This paper presents a theoretical model and empirical analysis that connects the prevalence of intra‐industry trade with increased wage inequality from trade liberalization in both skilled and unskilled labor abundant countries. The Stolper–Samuelson effect is incorporated into an intra‐industry trade liberalization (intra‐ITL) hypothesis where skilled labor opposes protectionism in all countries engaged in intra‐industry trade because skilled workers gain at the expense of unskilled workers from multilateral trade liberalization within the skill‐intensive sector. We examine empirical evidence on whether skilled individuals are more supportive of trade liberalization than unskilled individuals across 31 countries with different levels of intra‐industry trade and skill endowments. We find that the extent to which countries engage in intra‐industry trade in high‐tech commodities is strongly linked with the intensity of opposition to protection by skilled labor. Regression results strongly support our hypothesis that skilled workers, almost everywhere, are more likely to support free trade.     

Relative Demand for Skills in Swedish Manufacturing: Technology or Trade?

The rate of change in the share of skilled labor has increased steadily over the past 35 years in Swedish manufacturing. A closer inspection of the period after 1970 indicates that, while relative supply changes of skilled labor seem to have been the main driving force behind the growing skill shares in manufacturing industries over the period 1970–85, an acceleration in the relative demand for skills appears to have propelled higher skill shares during the late 1980s and at the beginning of the 1990s. Consistent with such a development is the finding of an increasing degree of complementarity between knowledge capital and skilled labor, and that Swedish manufacturing firms, in recent years, have invested heavily in R&D. There is also some support for the belief that intensified competition from the South has increased the relative demand for skilled labor. However, the impact appears to be small and essentially driven by the textile industry.     

Capital–Skill Complementarity and Inequality in Sweden

Income inequality increased in Sweden during the 1980s and 1990s, as did the returns to higher education. The main conclusion of this study is that increased income inequality between high‐ and low‐skilled workers is demand driven and is due to the presence of capital–skill complementarity in production. Increased investments in new, more efficient capital equipment, along with a slowdown in the growth rate of skilled labor, have raised the ratio of effective capital inputs per skilled worker, which, in turn, has increased the relative demand (and market return) for skilled labor through the capital–skill complementarity mechanism.     

新疆农民利用互联网提高技能教育的探究

新疆农民劳动技能信息传递水平偏低,技能教育急需提高。有效的互联网信息传播,可以迅速提高农民学习新技术的积极性,改善边疆农民的职业性技能教育氛围,克服地域广阔、信息不对称和信息意识薄弱等缺陷。在互联网上,通过示范带动普通农户应用水平,改善多元化的支持服务、普及双语教育和降低费用等具体对策,以信息技术推动职业技能教育,将边疆农民的劳动技能与信息体验、效用价值、信任交互和偏好在内的基本因素都应用到职业教育领域内,提升边远地区农民的技能劳动的能力。     

THE IMPORTANCE OF SKILL MEASUREMENT FOR GROWTH ACCOUNTING

In a growth accounting context one usually constructs a quality adjusted index of labor services by aggregating over predefined groups of workers, using the groups' relative wage bills as weights. In this article we suggest a method based on decomposing individual predicted wages into a skill‐related part and a part unrelated to skill, where the former consists of both observed and unobserved components. The predicted wages, associated with individual skill attributes, are sorted and classified into deciles. The median predicted skill‐related wage in each decile is used to construct an alternative skill‐adjusted index of labor services. We find that total factor productivity (TFP) growth decreases significantly when using the latter method. This means that when using the alternative method one explains more of the growth in labor productivity than what a more traditional labor quality adjustment procedure does.     

Skills,sunspots and cycles

This paper explores the ability of a class of one-sector, multi-input models to generate indeterminate equilibrium paths, and endogenous fluctuations, without relying on factors’ hoarding. The model presents a novel theoretical economic mechanism that supports sunspot-driven expansions without requiring upward sloping labor demand schedules. Its distinctive characteristic is that the skill composition of aggregate labor demand drives expansionary i.i.d. demand shocks. Next, the model explains the labor market dynamics from the supply side, while endogenizing the capital productivity response to changes in the aggregate labor demand composition. Last but not least, it is worth to mention that the model presents an effective shock propagation mechanism that operates into the labor market and across labor market segments through the cross elasticities of equilibrium labor demand and supplies.      

Foreign Capital,Skill Formation,and Migration of Skilled Workers

We study the interaction between foreign capital inflow and international migration of skilled labor when a small open economy is subject to exogenous shocks. The presence of a skill formation sector is central to our analysis, such that import liberalization and increased foreign capital inflow may lead to increased skill emigration both in absolute terms and as percentage of gross skill formation. Furthermore, a positive product price shock for the sector that uses foreign capital may turn out to be immiserizing. Finally, growth in the agricultural sector can lower the rate of skill formation as well as skill emigration.     

Cross-country variation in educational attainment: structural change or within-industry skill upgrading?

Educational attainment varies greatly across countries and within countries over time. This paper asks whether the variation in education is primarily due to industry composition or to within-industry skill intensities. The main finding is that within-industry variation accounts for at least two-thirds of the cross-country and the time-series variation in educational attainment. The within-industry education gaps are broadly consistent with a model of industry neutral cross-country differences in skilled labor productivity. These results suggest that theories of educational development should focus on skill upgrading within industries rather than structural change.     

Immigration-induced effects of changes in size and skill distribution of the labor force on wages in the U.S.

We isolate the effect of immigration-induced changes in the size and skill distribution of the labor force on labor market outcomes using a model in which firms endogenously respond to these changes. We analytically show that while the immigration-induced increase in the size increases the relative wages, employment and output shares of the skill intensive sector, changes in the skill distribution lead to analytically ambiguous effects. We derive quantitative results for the US economy under different counter-factual scenarios with respect to immigration-induced changes in size and skill distribution of the labor force, where these changes resemble those of U.S. as a whole, New York, California and Canada, and reflect different immigration policy regimes. For example, immigration increases the mass of workers at the lower range of the skill distribution in the U.S., and the upper range in Canada. Regardless of these differences across scenarios, our quantitative results indicate that immigration increases the relative average wages of the skill intensive sector. Further, real wages of all workers increase due to reduced prices caused by the increased size of the labor force.     

Capital–Skill Complementarity: Does Capital Composition Matter?

We estimate the effect of capital composition on the size of capital–skill complementarity and the skill wage premium. Disaggregating the capital stock into different types according to technological content, we find that: capital is more of a q‐complement to skilled labor than to unskilled labor; the higher the technological component of capital, the larger the size of the relative q‐complementarity between capital and skilled labor; and replacing non‐technological with technological capital might increase the skill wage premium by about 9 percent. Our results highlight that changes in capital composition matter for understanding changes in the skill wage premium.     

FDI、劳动异质性与我国劳动收入份额

不同技能劳动的划分一直是劳动力市场的一个重要研究视角,也是难点之一。文章创新性地采用模糊聚类方法测算了我国第二产业中各行业的劳动高技能性,推算了高低劳动技能行业的工资比率,并进一步实证分析了高低劳动技能行业的工资比率、FDI等因素对我国劳动收入份额的影响。研究结果表明:(1)由于高技能劳动一般与资本结合得更为紧密,高低劳动技能行业工资比率的提高抑制了劳动收入份额的上升;(2)FDI引入对我国劳动收入份额也具有负向影响。     

Intermediate good sourcing,wages and inequality: From theory to evidence

This paper examines the consequences of offshoring and outsourcing on domestic wages and wage inequality. I highlight the role of labor market frictions in impacting firms’ outsourcing and offshoring decisions; specifically, how differential costs of matching with workers affect the location of production (onshore or offshore) and how differential costs of assessing worker quality affect the ownership of intermediate production (intra‐firm or inter‐firm). I demonstrate how firm sourcing decisions can depend crucially on the industry skill intensity, which reflects the importance of worker–firm match quality, and as a result, the effect of offshoring on domestic labor depends on occupation and industry characteristics, as well as the ownership regime of trade. Bringing the theory to the data I rely on plausibly exogenous variation in the cost of inter‐ and intra‐firm offshoring to identify the effects of a change in each type of offshoring on domestic wages. I find strong evidence that the effect of offshoring on domestic wages—both on the average and on the wage distribution—is governed by the type of offshoring (inter‐ vs. intra‐firm), the skill intensity of the industry, and the offshorability of the occupation.     

人工智能对劳动收入水平和收入差距的影响——理论解读与实证检验

人工智能的发展对劳动市场产生了深远影响，但其对劳动收入水平和收入差距的效应仍处于探索阶段，且定量评估不足，缺少行业层面的经验证据。本文基于Acemoglu&Restrepo(2018)的人工智能技术模型，并引入行业人工智能发展的非对称性变动，从智能渗透和边界延展两方面分析人工智能对劳动收入水平与技能收入差距的影响及机理，并通过2003—2020年中国行业面板数据进行实证检验。结果发现：(1)人工智能对劳动收入水平和技能收入差距具有显著影响。从长期来看，人工智能的发展可以提高劳动收入水平，缩小技能收入差距。(2)人工智能对低技能劳动收入水平的冲击显著大于对高技能劳动收入水平的冲击。(3)人工智能通过提升高低技能劳动力就业水平增加劳动收入水平，缩小技能收入差距。     

Adverse selection in credit markets and regressive profit taxation

In many countries, taxes on businesses are less progressive than labor income taxes. This paper provides a justification for this pattern based on adverse selection that entrepreneurs face in credit markets. Individuals choose between becoming entrepreneurs or workers and differ in their skill in both of these occupations. I find that endogenous cross-subsidization in the credit market equilibrium results in excessive (insufficient) entry of low-skilled (high-skilled) agents into entrepreneurship. This gives rise to a corrective role for differential taxation of entrepreneurial profits and labor income. In particular, a profit tax that is regressive relative to taxes on labor income restores the efficient occupational choice.     

Capital–skill complementarity and the immigration surplus

We build a neoclassical growth model with overlapping dynasties and capital–skill complementarities to evaluate changes in immigration policy. Calibrating the model using US data, we quantify the differential effects of skilled and unskilled immigration on factor returns and on the welfare of different sectors of the population. An influx of high-skilled immigrants lowers the wages of skilled workers, raises the wages of unskilled workers, and because of the relative complementarity between capital and skilled labor, substantially raises the rate of return to native-owned capital. By contrast, an influx of unskilled immigrants produces an opposite effect on wages, and has only a negligible effect on the return to capital. Because of capital–skill complementarity, an increase in the number of skilled immigrants generates an immigration surplus—the overall welfare benefit accruing to the native population—that is approximately ten times larger than the immigration surplus generated by an identical increase in the number of unskilled immigrants. This differential welfare effect is far higher than can be accounted for by the disparity between the productivities of each type of worker.     

Investment-specific technological change, skill accumulation, and wage inequality

Wage inequality between education groups in the United States has increased substantially since the early 1980s. The relative number of college-educated workers has also increased dramatically in the postwar period. This paper presents a unified framework where the dynamics of both skill accumulation and wage inequality arise as an equilibrium outcome driven by measured investment-specific technological change. Working through equipment–skill complementarity and endogenous skill accumulation, the model does well in capturing the steady growth in the relative quantity of skilled labor during the postwar period and the substantial rise in wage inequality after the early 1980s. Based on the calibrated model, we examine the quantitative effects of some hypothetical tax-policy reforms on skill accumulation, wage inequality, and welfare.     

SKILL BIAS AND EMPLOYMENT FRICTIONS IN THE U.S. LABOR MARKET 1970–1990*

This article studies simultaneous changes in four labor market variables: the unemployment rates for college and high‐school graduates, the education wage premium, and the level of college participation. It develops an equilibrium search and matching model of the labor market where education is endogenously determined. Then the model is used to investigate quantitatively whether the change in the above labor market variables from 1970 to 1990 in the United States can be traced to changes in the environment. A skill‐biased change in technology together with an increase in employment frictions can explain much of the observed variation in these variables.     

Wage–productivity differentials and Indian economic efficiency

A frontier-general equilibrium analysis with skill transformation evaluates the productivities of skilled and unskilled labor and potential of the Indian economy. We compare the wages of skilled and unskilled labor between 1994 and 2002 with their respective productivities over this period. Education is considered to be responsible for the skill formation over this period: the change in skilled labor supply is endogenous in the model. Compared to its productivity, skilled labor is underpaid in the initial period and overpaid in the second period. Unskilled labor is underpaid in both periods. A decomposition exercise shows that skilled labor gains from free trade, and stands to lose due to education and domestic competition in the second period. The annualized rate of return to education is between 7 and 10%. The economy operates below its potential in both periods, particularly in the second—due to trade limitations and the failure to capture the return to education. Service sectors are found to have potential to grow significantly.