Geography of Skills and Global Inequality

55 Pages Posted: 24 Sep 2018

See all articles by Michał Burzyński

Michał Burzyński

Luxembourg Institute of Socio-Economic Research (LISER)

Christoph Deuster

NOVA University of Lisbon

Frédéric Docquier

Luxembourg Institute of Socio-Economic Research (LISER); Université catholique de Louvain; CREAM, Centre for Research on Environmental Appraisal & Management, UK; IZA Institute of Labor Economics

Date Written: September 2018

Abstract

This paper analyzes the factors underlying the evolution of the worldwide distribution of skills and their implications for global inequality. We develop and parameterize a two-sector, two-class, world economy model that endogenizes education and mobility decisions, population growth, and income disparities across and within countries. First, our static experiments reveal that the geography of skills matters for global inequality. Low access to education and sectoral misallocation of skills substantially impact income in poor countries. Second, we produce unified projections of population and income for the 21st century.Assuming the continuation of recent education and migration policies, we predict stable disparities in the world distribution of skills, slow-growing urbanization in developing countries and a rebound in income inequality. These prospects are sensitive to future education costs and to internal mobility frictions, which suggests that policies targeting access to all levels of education and sustainable urban development are vital to reduce demographic pressures and global inequality in the long term.

Keywords: human capital, migration, urbanization, growth, inequality

JEL Classification: E24, J24, O15

Suggested Citation

Burzyński, Michał and Deuster, Christoph and Docquier, Frédéric, Geography of Skills and Global Inequality (September 2018). IZA Discussion Paper No. 11804, Available at SSRN: https://ssrn.com/abstract=3253462

Michał Burzyński (Contact Author)

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

Maison des Sciences Humaines
11, Porte des Science
Esch-sur-Alzette/Belval, L-4366
Luxembourg

HOME PAGE: http://https://sites.google.com/site/mpburzynski/

Christoph Deuster

NOVA University of Lisbon ( email )

Portugal

Frédéric Docquier

Luxembourg Institute of Socio-Economic Research (LISER) ( email )

11, Porte des Sciences
Campus Belval – Maison des Sciences Humaines
Esch-sur-Alzette, L-4366
Luxembourg

Université catholique de Louvain ( email )

IRES
Place Montesquieu 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://perso.uclouvain.be/frederic.docquier/

CREAM, Centre for Research on Environmental Appraisal & Management, UK

University of Newcastle
NE1 7RU Newcastle Upon Tyne
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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