Sectoral Heterogeneity, the Skill Premium and Productivity Dynamics
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چکیده
An intricate dynamic pattern has been commonly observed in many developed countries during the past decades. This pattern contains a simultaneous rise in the following economic variables: (i) education premium, (ii) educated labor supply, (iii) total factor productivity, (iv) labor productivity, and (v) income inequality. Typical explanations for the different elements of this pattern assume a skill-biased technical change or capital-skill complementarity. However, none of the models in this literature has provided a unified explanation for all these elements. In this study we offer such a unified theory which is based on sectoral heterogeneity and endogenous factor mobility, rather than on a skill bias.
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