Jürgen Antony
Directed Sector and Skill-Specific Technological Change: The
Development of Wages for the High and Low Skilled
Abstract:
This paper presents a dynamic two sector, two skill groups model of
endogenous
skill and sector specific technological change. The sectors refer to a
“high-tech” and a “low-tech” sector of an economy. The direction of
technological
change is driven by market forces determined by the skill composition
of
the work force. It is shown that a change in this skill composition - a
higher growth rate of the high skilled workforce in the “high-tech”
sector
than in the “low-tech” sector - leads to an increasing relative wage of
the high skilled despite the fact that the aggregate supply of the high
skilled might rise. This directed technological adjustment can easily
overcome
the usual substitution effect which would lead the relative wage to
fall.
The important result of the model is that the result does not depend on
high values of the elasticity of substitution as necessary in other
models
of directed technological change, e.g. Acemoglu (1998, 2001). Further
some
of these models can be interpreted as special cases of the present
model.
Some open economy extensions show how effects of the mentioned change
in
the skill composition of the work force can spill over from one country
to another if both countries engage in free trade and if the state of
technology
is determined globally.
JEL: E25, J31, O31, F16
Paper:
Paper available as pdf-file.
Beitrag Nr. 236, Volkswirtschaftliche Diskussionsreihe, Institut
für
Volkswirtschaftslehre der Universität Augsburg
Contact:
Jürgen
Antony
email: juergen.antony@wiwi.uni-augsburg.de
v.
K., 20.02.2003