Working Paper

Human capital, unemployment, and relative wages in a global economy


Abstract: This paper develops a simple framework for examining human capital accumulation, unemployment, and relative wages in a global economy. It builds on the models of Davis (1998a, b) of trade between a flexible-wage America and a rigid-wage Europe. To this it adds a model of human capital accumulation based on Findlay and Kierzkowski (1983). A variety of comparative statics are examined, including changes in educational capital and population, entry of new countries to the trading world, technical change, and a productivity slowdown. We derive the consequences for the skilled-to unskilled wage gap, unemployment, and skill composition.

Keywords: International trade; Human capital; Unemployment; Wages;

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File(s): File format is application/pdf http://www.federalreserve.gov/pubs/ifdp/2000/659/ifdp659.pdf

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: International Finance Discussion Papers

Publication Date: 2000

Number: 659