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Skill-biased technological change and wage inequality in developing countries

Jiancai Pi and Pengqing Zhang

International Review of Economics & Finance, 2018, vol. 56, issue C, 347-362

Abstract: This paper theoretically examines how skill-biased technological change influences the skilled-unskilled wage inequality in developing countries. In the basic model, we find that in a two-sector economy with full employment, an increase in the magnitude of skill-biased technological change will expand the skilled-unskilled wage inequality if the labor's distributive share in the skilled sector is large enough relative to that in the unskilled sector. When we extend the basic model by taking different characteristics into consideration, we find that an increase in the magnitude of skill-biased technological change will conditionally in a way similar to that in the basic model or unconditionally widen the wage inequality.

Keywords: Skill-biased technological change; Skilled-unskilled wage inequality; General equilibrium approach; Labor market structure; Developing countries (search for similar items in EconPapers)
JEL-codes: D58 J31 O33 (search for similar items in EconPapers)
Date: 2018
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