Human Capital, Unemployment, and Relative Wages in a Global Economy

Donald R. Davis, Trevor A. Reeve

NBER Working Paper No. 6133
Issued in August 1997
NBER Program(s):   ITI

This paper develops a simple framework for examining human capital accumulation, unemployment, and relative wages in a global economy. It builds on the models of Davis (1997a, b) of trade between a flexible wage America and a rigid wage Europe. To this it adds a model of human capital accumulation based on Findlay and Kierzkowski (1983). A variety of comparative statics are examined, including changes in educational capital and population, entry of new countries to the trading world, technical change, and a productivity slowdown. We derive the consequences for the skilled-to-unskilled wage gap, unemployment, and skill composition.

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Published: Published as "Technology, Unemployment, and Relative Wages in a Global Economy", European Economic Review, Vol. 42, no. 9 (November 1998): 1613-1 633.

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