Distant Labour Supply, Skills and Induced Technical Change
26 Pages Posted: 18 May 2006
Date Written: November 22, 2006
Abstract
To analyze the consequences of new technologies, which make it possible to employ distant labour, we model a developed country with high and medium-skilled labour interacting with an emerging market economy (EME) with medium and low-skilled labour. Expansion in labour supply induces medium-skill biased technical change, which raises the demand for such labour. As a result, inequalities tend to fall in the developed country, skill premiums rise marginally in the EME, but equality rises because labour employed in the low-skilled sector shrinks. Inequality falls across the countries since average wages, information and access rise in the EME.
Keywords: IInternet and communication technology, induced technological change, relative factor supplies, labour skills
JEL Classification: O31, O14, J61
Suggested Citation: Suggested Citation
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