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Board of Governors of the Federal Reserve System (U.S.)
International Finance Discussion Papers
Human capital, unemployment, and relative wages in a global economy
Donald R. Davis
Trevor A. Reeve
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.


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Donald R. Davis & Trevor A. Reeve, Human capital, unemployment, and relative wages in a global economy, Board of Governors of the Federal Reserve System (U.S.), International Finance Discussion Papers 659, 2000.
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Keywords: International trade ; Human capital ; Unemployment ; Wages
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