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Globalization, Skill Accumulation and the Skill Premium

Authors


  • We wish to thank the French Research National Agency (ANR) for its financial support. Kirill Borissov also thanks the Russian Foundation for Basic Research (grant No. 11-06-00183-a). We are grateful to Leonid Azarnert, Nathalie Chusseau and Stephane Lambrecht and an anonymous referee for fruitful comments.

Abstract

We analyze the impact of globalization upon the skill premium (inequality) in advanced countries from a two-goods North–South model with skill accumulation. Globalization consists of an increase in the size of the South. Its impact on inequality depends on its intensity and on the pre-globalization proportion of skilled workers. The post-globalization inequality is a non-monotonic function of the pre-globalization proportion of skilled workers and of the globalization intensity. The impact is different for the generation in work and for the following generations. There is a threshold value of the skill endowment under (above) which inequality is lower (higher) after than before globalization.

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