Skilled Labor, Economic Transition and Income Differences: A Dynamic Approach

Wei Zou and Yong Liu ()
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Wei Zou: Institute for Advanced Study, Wuhan University

Annals of Economics and Finance, 2010, vol. 11, issue 2, 247-275

Abstract: We propose a dynamic model of economic transition in which the supply constraint of skilled labor and skill premium are the focus. We argue that the constraint of skilled labor affect both the beginning date and the subsequent path of modern growth. The model matches the observed multiple paths of income inequality, such as "U-shaped", "inverted U-shaped" or "N-shaped" paths. Hence, the model requires faster technology change and more investment on skill formation to account for the current income differences relative to models that focus only on steady states.

Keywords: Skilled labor; Economic transition; Income inequality (search for similar items in EconPapers)
JEL-codes: D58 O11 O14 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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