The Skill Premium, Technological Change and Appropriability

CentER Working Paper No. 2000-56

31 Pages Posted: 20 Oct 2000

See all articles by Richard Nahuis

Richard Nahuis

CPB Netherlands Bureau of Economic Policy Analysis (Deceased)

Sjak Smulders

Tilburg University - Tilburg University School of Economics and Management; University of Calgary - Department of Economics

Date Written: May 2000

Abstract

In the U.S., the skill premium and the non-production/production wage differential increased strongly from the late 1970s onwards. Skill-biased technological change is now generally seen as the dominant explanation, which calls for theories to explain the bias. This paper shows that the increased supply of skill - which is usually seen as countervailing the rise in skill premiums - can actually cause rising skill premiums. The analysis starts from an R&D-driven endogenous growth model. Our key assumption is that skilled labour is employed in non-production activities that both generate and use knowledge inputs. If firms can sufficiently appropriate the intertemporal returns from these activities, skill premiums may rise with the supply of skilled labour. The degree of appropriability is endogenous and rises with the supply of skills. As a result, the skill premium first falls and then increases when skilled labour supply rises. Simultaneously, patents per dollar spent on R&D fall.

Keywords: wage inequality, growth, technological change, appropriability

Suggested Citation

Nahuis, Richard and Smulders, Jacobus (Sjak) A., The Skill Premium, Technological Change and Appropriability (May 2000). CentER Working Paper No. 2000-56. Available at SSRN: https://ssrn.com/abstract=246963 or http://dx.doi.org/10.2139/ssrn.246963

Richard Nahuis

CPB Netherlands Bureau of Economic Policy Analysis (Deceased)

N/A

Jacobus (Sjak) A. Smulders (Contact Author)

Tilburg University - Tilburg University School of Economics and Management ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 2920 (Phone)
+31 13 466 3042 (Fax)

HOME PAGE: http://www.uvt.nl/webwijs/english/show.html?anr=801585&lang=en

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
82
Abstract Views
1,019
rank
312,217
PlumX Metrics