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• W2149969370 abstract "We sketch a model that shows how skill-biased technological change may reverse the classic Balassa-Samuelson effect, leading to a negative relationship between the productivity in the tradable sector and the real exchange rate. In a small open economy, export goods are produced with capital, high-skilled and low-skilled labor, and traded for imported consumption goods. Non-tradable services are produced with low-skilled labor only. A rise in the productivity of capital has two effects: (1) It may reduce the demand for labor in the tradable sector if the substitutability of low-skilled labor and capital in the tradable sector is high; and (2) it increases the demand for non-tradables and its labor input. Overall demand for low-skilled labor declines if the labor force of the tradable sector is large relative to the labor force of the non-tradable sector. This leads to lower wages and thus to lower prices and a real exchange rate depreciation." @default.
• W2149969370 created "2016-06-24" @default.
• W2149969370 creator A5017372901 @default.
• W2149969370 creator A5046204161 @default.
• W2149969370 date "2012-05-01" @default.
• W2149969370 modified "2023-09-27" @default.
• W2149969370 title "Skill-Biased Technological Change and the Real Exchange Rate" @default.
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• W2149969370 hasPublicationYear "2012" @default.
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