SKILL-BIASED TECHNOLOGICAL CHANGE, UNEMPLOYMENT, AND BRAIN DRAIN

Harald Fadinger and Karin Mayr-Dorn

Journal of the European Economic Association, 2014, vol. 12, issue 2, 397-431

Abstract: We develop a model of directed technology adoption, frictional unemployment, and migration to examine the effects of a change in skill endowments on the wages, employment rates, and emigration rates of skilled and unskilled workers. We find that, depending on the elasticity of substitution between skilled and unskilled workers and the elasticity of the matching function, an increase in the skill ratio can reduce both the relative unemployment rate and the relative emigration rate (brain drain) of skilled workers. We provide numerical simulations to support our findings and show that the effects are empirically relevant and potentially sizable.

Date: 2014
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Related works:
Working Paper: Skill-biased technological change, unemployment and brain drain (2012)
Working Paper: Skill-biased technological change, unemployment and brain drain (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jeurec:v:12:y:2014:i:2:p:397-431

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