Chu, Angus C. and Cozzi, Guido and Furukawa, Yuichi (2012): From China with love: Effects of the Chinese economy on skill-biased technical change in the US.
![Warning](/style/images/warning.png)
Preview |
PDF
MPRA_paper_40555.pdf Download (237kB) | Preview |
Abstract
In this study, we analyze the effects of labor shortage in China on the direction of innovation in the US by incorporating production offshoring into a North-South model of directed technical change. We �find that if offshoring is present (absent) in equilibrium, then a decrease (an increase) in unskilled labor in the South would lead to skill-biased technical change in the North. This fi�nding highlights the different implications of offshoring and conventional trade on innovation. Furthermore, we �find that an increase in the Southern stock of capital reduces offshoring and also leads to skill-biased technical change. Therefore, rapid capital accumulation and labor shortage in China could lead to a rising skill premium in the US. Calibrating the model to China-US data, we �find that a 1% decrease in unskilled labor (1% increase in capital) in China leads to a 0.8% (0.6%) increase in the skill premium in the US under a moderate elasticity of substitution between skill-intensive and labor-intensive goods.
Item Type: | MPRA Paper |
---|---|
Original Title: | From China with love: Effects of the Chinese economy on skill-biased technical change in the US |
Language: | English |
Keywords: | economic growth; skill-biased technical change; offshoring |
Subjects: | F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization ; Manufacturing and Service Industries ; Choice of Technology |
Item ID: | 40555 |
Depositing User: | Prof. Angus C. Chu |
Date Deposited: | 08 Aug 2012 11:58 |
Last Modified: | 10 Oct 2019 04:23 |
References: | Acemoglu, D., 1998. Why do new technologies complement skills? Directed technical change and wage inequality. Quarterly Journal of Economics, 113, 1055-1089. Acemoglu, D., 2002. Directed technical change. Review of Economic Studies, 69, 781-809. Acemoglu, D., 2003. Patterns of skill premia. Review of Economic Studies, 70, 199-230. Acemoglu, D., Gancia, G., and Zilibotti, F., 2012. Offshoring and directed technical change. manuscript. Acemoglu, D., and Zilibotti, F., 2001. Productivity differences. Quarterly Journal of Economics, 116, 563-606. Aghion, P., and Howitt, P., 1992. A model of growth through creative destruction. Econometrica, 60, 323-351. Bai, C., Hsieh, C., and Qian, Y., 2006. The return to capital in China. Brookings Papers on Economic Activity, 37, 61-102. Chu, A., 2011. The welfare cost of one-size-fits-all patent protection. Journal of Economic Dynamics and Control, 35, 876-890. Gancia, G., and Bonfiglioli, A., 2008. North-South trade and directed technical change. Journal of International Economics, 76, 276-295. Gancia, G., and Zilibotti, F., 2005. Horizontal innovation in the theory of growth and development. In: Aghion, P., Durlauf, S., (Eds.), Handbook of Economic Growth, 1A, 111-170. North-Holland, Amsterdam. Goh, A.-T., and Olivier, J., 2002. Optimal patent protection in a two-sector economy. International Economic Review, 43, 1191-1214. Grossman, G., and Helpman, E., 1991. Quality ladders in the theory of growth. Review of Economic Studies, 58, 43-61. Grossman, G., and Rossi-Hansberg, E., 2008. Trading tasks: a simple theory of offshoring. American Economic Review, 98, 1978-1997. Iwaisako, T., and Futagami, K., 2012. Patent protection, capital accumulation, and economic growth. Economic Theory, forthcoming. Li, C.-W., 2001. On the policy implications of endogenous technological progress. Economic Journal, 111, C164-C179. Park, W., 2008. International patent protection: 1960-2005. Research Policy, 37, 761-766. Romer, P., 1990. Endogenous technological change. Journal of Political Economy, 98, S71-S102. Segerstrom, P., Anant, T.C.A. and Dinopoulos, E., 1990. A Schumpeterian model of the product life cycle. American Economic Review, 80, 1077-91. Xing, Y., 2011. Processing trade, exchange rates and China's bilateral trade balances. GRIPS Discussion Paper 10-30. |
URI: | https://mpra.ub.uni-muenchen.de/id/eprint/40555 |
Available Versions of this Item
- From China with love: Effects of the Chinese economy on skill-biased technical change in the US. (deposited 08 Aug 2012 11:58) [Currently Displayed]