 From Skills to Occupations: Comparative Advantage and Cross-Country Income DifferencesCharles Gottlieb, Jan Grobovsek and Alexander Monge-Naranjo No 20630, CEPR Discussion Papers from Centre for Economic Policy Research Abstract: We revisit the role of human capital in cross-country income differences. We develop a general equilibrium model where workers of different skill groups sort into occupations by comparative advantage. Wages and employment depend on workers’ skill quality, occupation-specific country-embedded productivity, and occupational distortions. Using harmonized microdata for 50 countries, we infer these components from the model’s equilibrium conditions. Workers in rich countries exhibit higher skill quality and substantially greater productivity, especially in white-collar occupations. Human capital explains 52 percent of output-per-worker gaps, largely through the complementarity between skill composition and quality, and further amplified by technology choices biased toward skilled labor. Adopting the U.S. distribution of skill groups yields limited gains for poor countries without higher quality. Occupational distortions are more severe in low-income countries, reducing white-collar employment and raising wage premia, but with modest aggregate effects. JEL-codes: E24 J24 J31 O15 O47 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:20630 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK. |
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