Skill-biased technological change, unemployment and brain drain

Author(s)
Harald Fadinger, Karin Mayr
Abstract

We develop a model of directed technology adoption, frictional unemployment, and migration to examine the effects of a change in skill endowments on the wages, employment rates, and emigration rates of skilled and unskilled workers. We find that, depending on the elasticity of substitution between skilled and unskilled workers and the elasticity of the matching function, an increase in the skill ratio can reduce both the relative unemployment rate and the relative emigration rate (brain drain) of skilled workers. We provide numerical simulations to support our findings and show that the effects are empirically relevant and potentially sizable.

Organisation(s)
Department of Economics
Journal
Journal of the European Economic Association
Volume
12
Pages
397-431
No. of pages
35
ISSN
1542-4766
DOI
https://doi.org/10.1111/jeea.12049
Publication date
01-2014
Peer reviewed
Yes
Austrian Fields of Science 2012
502002 Labour economics
ASJC Scopus subject areas
Economics, Econometrics and Finance(all)
Sustainable Development Goals
SDG 8 - Decent Work and Economic Growth
Portal url
https://ucris.univie.ac.at/portal/en/publications/skillbiased-technological-change-unemployment-and-brain-drain(9925a929-2664-49d7-bb76-cf58377d012a).html