Real exchange rates and skills

Vincent Bodart and Jean-François Carpantier

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Abstract: Recent developments in trade theory strongly emphasize that international trade requires an intensive use of skilled workers. Against this background, we explore in this paper whether labor skills are a key determinant of real exchange rates in the long run. Using panel regressions covering 22 countries over the period 1950–2010, we find that labor skills are indeed a structural determinant of real exchange rates, with a permanent increase of the skilled–unskilled labor ratio leading to a long-run appreciation of the real exchange rate. This finding is robust to the inclusion of several control variables, like those used in traditional analyses of real exchange rates.

Keywords: C23; F31; F41; I25; Real exchange rate; Factor endowments; Skills; Balassa–Samuelson effect (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

Published in Journal of International Money and Finance, 2016, 67 (C), pp.305-319. ⟨10.1016/j.jimonfin.2015.0⟩

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Related works:
Journal Article: Real exchange rates and skills (2016)
Working Paper: Real Exchange Rates and Skills (2014)
Working Paper: Real Exchange Rates and Skills (2014)
Working Paper: Real Exchange Rates and Skills (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01821128

DOI: 10.1016/j.jimonfin.2015.0

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