Skill Upgrading and the Real Exchange Rate

Roberto Alvarez and Ricardo López Rago

No 2008-020, CAEPR Working Papers from Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington

Abstract: This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant-level data from the manufacturing sector we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non-exporters. This result suggests that depreciations or, more generally, increases in export profitability, may induce exporters to adopt more skilled-intensive technologies. This finding gives support to recent models of trade that highlight the possible effect of the real exchange rate on skill upgrading and wage inequality. This paper also finds that real depreciations increase the probability of exporting and the export intensity of plants that export, suggesting that these two channels may explain why changes in the real exchange rate may affect wages.

JEL-codes: F14 F16 O30 O54 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2008-07
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Citations: View citations in EconPapers (1)

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Journal Article: Skill Upgrading and the Real Exchange Rate (2009)
Working Paper: Skill Upgrading and the Real Exchange Rate (2009)
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