Skilled Labor Productivity and Cross-Country Income Differences
American Economic Journal: Macroeconomics
vol. 15,
no. 1, January 2023
(pp. 240-68)
Abstract
This paper revisits the question of how allowing for imperfect substitution among workers with different skill levels affects the results of development accounting. We consider a range of models that nest the approaches in the literature and calibrate them to a common set of moments, including particularly evidence on the wage gains of migrants. We obtain two main results. First, human capital accounts for between one-half and three-fourths of cross-country income gaps. Second, human capital accounts for only modest variation in the relative productivity of skilled versus unskilled labor.Citation
Hendricks, Lutz, and Todd Schoellman. 2023. "Skilled Labor Productivity and Cross-Country Income Differences." American Economic Journal: Macroeconomics, 15 (1): 240-68. DOI: 10.1257/mac.20200256Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E25 Aggregate Factor Income Distribution
- J22 Time Allocation and Labor Supply
- J23 Labor Demand
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J61 Geographic Labor Mobility; Immigrant Workers
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