This paper seeks to study the factors that affect the demand and supply of skilled workers and how this is reflected by the difference in salaries with unskilled workers. The author indicates that the importance of the evolution of the skill premium relies on two basic factors: its importance as a measure of inequality among workers, and as a key tool that describes how the development and globalization processes have been in the studied economy. To dig into these factors, the methodology used is an empirical analysis backed up by the CES katz and Murphy (1992) macroeconomic framework, in four aspects: technology imports to Chile, between-and within-sector decomposition, times series evidence, and sectoral evidence. Such analysis is based on sectoral and macroeconomic data obtained and organized by the author from previous working papers and public Chilean information sources.
The paper is organized as follows. After a brief introduction, section two presents a group of facts related to the evolution of the skill premium and supply and demand factors in Chile. Subsequently, section three presents some motivating theories before empirical evidence is presented, while Section four presents the empirical results of the paper. Finally Section five concludes.
The author concludes that:
- the patterns of skill upgrading in Chile and the US are specially correlated in sectors that import technologies from abroad
- the evidence seems to support theories that emphasize the role of technology transfers from developed to developing countries in skill premium
- policies should aim to increase the supply of educated workers that may help correct the adverse effects of technology transfers on inequality
- improving intellectual property rights in developing countries could create incentives to the development of technologies that are better suited towards the labor force available
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