Real Exchange Rates and Skills

Vincent Bodart and Jean-François Carpantier

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: While most of the literature on the determination of real exchange rates is focused on the role of standard macroeconomic variables, there exists how- ever a few papers that are more concerned by the impact of factors which are usually considered to play a key role in the process of economic development, like demography or inequality. In the present paper, we extend this small branch of the literature by exploring the relationship between labor skills and real exchange rates over 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 findings is robust to the inclusion of several control variables, like those used in traditional analyses of real exchange rates.

Keywords: Real exchange rate; human capital; skills; Balassa-Samuelson effect. (search for similar items in EconPapers)
JEL-codes: C23 F31 F41 I25 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-int and nep-opm
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Related works:
Journal Article: Real exchange rates and skills (2016)
Working Paper: Real exchange rates and skills (2016)
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:luc:wpaper:14-03

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