Template-Type: ReDIF-Paper 1.0 Series: Tinbergen Institute Discussion Papers Creation-Date: 2002-08-14 Revision-Date: 2005-04-08 Number: 02-081/3 Author-Name: Coen N. Teulings Author-Email: c.teulings@seo.nl Author-Workplace-Name: University of Amsterdam Title: Comparative Advantage, Relative Wages, and the Accumulation of Human Capital Abstract: 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.

See the publication in Journal of Political Economy, 2005, 113(2), 425-461. Classification-JEL: D30; J24. Keywords: assignment; wage distribution; human capital. File-Url: https://papers.tinbergen.nl/02081.pdf File-Format: application/pdf File-Size: 401879 bytes Handle: RePEc:tin:wpaper:20020081