Population aging and the dynamics of the skill income gap: An analysis of a multiple mediation effect

Yihe Chu, Yujia Li and Ming Che

Finance Research Letters, 2024, vol. 62, issue PB

Abstract: This paper investigates how population aging influences the skill income gap via two pathways: the skill supply and skill-biased technical changes. Utilizing both simple and multiple mediating effects models for empirical analysis, this paper discovers that an increase in the old-age dependency ratio and a decrease in the child dependency ratio both elevate the relative supply of skilled labor and intensify skill-biased technical changes. These changes result in a dual effect: the augmented skilled labor supply reduces the skill income gap, whereas the enhanced skill-biased technical changes raise it. Among these two mechanisms, the impact of skill supply emerges as slightly more significant.

Keywords: Population aging; Skill income gap; Labor supply; Skill-biased technical changes; Mediating effect (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:62:y:2024:i:pb:s1544612324002721

DOI: 10.1016/j.frl.2024.105242

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