GEP Research Paper 01/06
Human Capital, Unemployment and Relative Wages in A Global Economy
Don Davis and Trevor Reeve
This paper was subsequently published in Trade, Investment and Labour: Proceedings of IEA Conference on Globalisation and Labour Markets, D. Greenaway, R. Upward and K. Wakelin (eds.) Palgrave (2002).
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 (1997a,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.
Issued in May 2001.
This paper is available in PDF format .