Skill Upgrading and the Real Exchange Rate
University of Chile - Department of Economics
Ricardo A. Lopez
Brandeis International Business School
July 14, 2008
CAEPR Working Paper No. 2008-020
This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant-level data from the manufacturing sector we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non-exporters. This result suggests that depreciations or, more generally, increases in export profitability, may induce exporters to adopt more skilled-intensive technologies. This finding gives support to recent models of trade that highlight the possible effect of the real exchange rate on skill upgrading and wage inequality. This paper also finds that real depreciations increase the probability of exporting and the export intensity of plants that export, suggesting that these two channels may explain why changes in the real exchange rate may affect wages.
Number of Pages in PDF File: 29
JEL Classification: F14, F16, O30, O54
Date posted: July 15, 2008
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