Effects of economic development in China on skill-biased technical change in the US ¬リニ
نویسندگان
چکیده
In this study, we analyze the e¤ects of a decrease in unskilled labor in China on the direction of innovation in the US by incorporating production o¤shoring into a North-South model of directed technical change. We nd that if o¤shoring is present (absent) in equilibrium, then a decrease in unskilled labor in the South would lead to skill-biased (unskill-biased) technical change in the North. This nding highlights the di¤erent implications of o¤shoring and conventional trade on innovation. Furthermore, we nd that an increase in the Southern stock of capital reduces o¤shoring and also leads to skill-biased technical change. Therefore, rapid capital accumulation and a decrease in unskilled labor in China could both lead to a rising skill premium in the US. Calibrating the model to China-US data, we nd that a 1% decrease in unskilled labor (1% increase in capital) in China leads to a 0.8% (0.6%) increase in the skill premium in the US under a moderate elasticity of substitution between skill-intensive and labor-intensive goods. JEL classi cation: O14, O33, J31, F16
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