Comparative Advantage, Relative Wages, and the Accumulation of Human Capital

Arbeitspapier

I apply Ricardo’s principle of comparative advantage to a theory of factor substitutability in a model with a continuum of worker and job types. Highly skilled workers have a comparative advantage in complex jobs. The model satisfies the distance-dependent elasticity of substitution (DIDES) characteristic: substitutability between types declines with their skill distance. I analyze changes in relative wages due to human capital accumulation. The concept of a complexity dispersion parameter or compression elasticity is introduced. Empirical studies suggest its value to be equal to two: a 1 percent increase in the stock of human capital reduces the Mincerian return by 2 percent.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 02-081/3

Classification and Topics

• Classification: Wirtschaft ; Distribution: General ; Human Capital; Skills; Occupational Choice; Labor Productivity
• Subject: assignment ; wage distribution ; human capital. ; Humankapital ; Faktorsubstitution ; Komparativer Vorteil ; Hochqualifizierte Arbeitskräfte ; Lohnstruktur ; Bildungsinvestition ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Teulings, Coen N.
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/85945
• Last update: 10.03.2025, 11:42 AM CET