Skill-Biased Technological Change, Unemployment and Brain Drain

Journal of the European Economic Association, 12/2, 397-431, 2014

Posted: 27 Sep 2019

See all articles by Karin Mayr-Dorn

Karin Mayr-Dorn

Johannes Kepler University of Linz

Harald Fadinger

University of Mannheim

Date Written: 2014

Abstract

We develop a model of directed technology adoption, frictional unemployment, and migration to examine the effects of a change in skill endowments on the wages, employment rates, and emigration rates of skilled and unskilled workers. We find that, depending on the elasticity of substitution between skilled and unskilled workers and the elasticity of the matching function, an increase in the skill ratio can reduce both the relative unemployment rate and the relative emigration rate (brain drain) of skilled workers. We provide numerical simulations to support our findings and show that the effects are empirically relevant and potentially sizable.

JEL Classification: F22, J61, J64, O33

Suggested Citation

Mayr-Dorn, Karin and Fadinger, Harald, Skill-Biased Technological Change, Unemployment and Brain Drain (2014). Journal of the European Economic Association, 12/2, 397-431, 2014, Available at SSRN: https://ssrn.com/abstract=3455883

Karin Mayr-Dorn (Contact Author)

Johannes Kepler University of Linz ( email )

Altenbergerstrasse 69
Linz, Upper Austria 4040
Austria

Harald Fadinger

University of Mannheim ( email )

Universitaetsbibliothek Mannheim
Zeitschriftenabteilung
Mannheim, 68131
Germany

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