Skill Premium, Biased Technological Change and Income Differences

Download or read book Skill Premium, Biased Technological Change and Income Differences written by Wei Zou and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using 1987-2006 panel data for China, we explore the dynamics of the skill premium. The present paper focuses on the skill premium as an explanation for why income differences are so large in China. Our empirics show that: the rise in the relative supply of skilled labor results in an increase, instead of a decrease, in the skill premium; domestic investment is not complementary with skill formation; the skillpremium is higher in more developed provinces; economic openness facilitates an increase in the skill premium; whether foreign direct investment induces skill-based technology change or not, it drives up the skillpremium. An array of policy prescriptions for reducing income differences and ensuring sustained economic growth are provided.