Logo
Munich Personal RePEc Archive

Effects of Economic Development in China on Skill-Biased Technical Change in the US

Chu, Angus C. and Cozzi, Guido and Furukawa, Yuichi (2012): Effects of Economic Development in China on Skill-Biased Technical Change in the US.

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_52926.pdf]
Preview
PDF
MPRA_paper_52926.pdf

Download (264kB) | Preview

Abstract

In this study, we explore the effects of a change in unskilled labor 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: absent offshoring and lacking intellectual property rights (IPRs) in China - as in the early 1980s - an increase in unskilled labor in China should lead to skill-biased technical change. If instead offshoring is present and/or IPRs are better enforced (as in more recent times), then a decrease in unskilled labor in China should lead to skill-biased technical change. Furthermore, an increase in the per capita stock of capital in China reduces offshoring and also leads to skill-biased technical change. Calibrating the model to China-US data, we find that under a moderate elasticity of substitution between skill-intensive and labor-intensive goods, the decrease in unskilled labor and the increase in capital in China can explain about one-third of the recent increase in the skill premium in China through skill-biased technical change in the US.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.