Titlebar

Export bibliographic data
Literature by the same author
plus on the publication server
plus at Google Scholar

 

Skills, Tasks and the Scarcity of Talent in a Global Economy

Title data

Koch, Michael:
Skills, Tasks and the Scarcity of Talent in a Global Economy.
In: Review of International Economics. Vol. 24 (2016) Issue 3 . - pp. 536-563.
ISSN 1467-9396
DOI: https://doi.org/10.1111/roie.12222

Abstract in another language

The scarcity of talent is a tremendous challenge for firms in the globalized world. This paper investigates the role of labor market imperfection in open economies for the usage of talent in the production process of firms. For this purpose, I set up a heterogeneous firms model, where production consists of a continuum of tasks that differ in complexity. Firms hire low-skilled and high-skilled workers to perform these tasks. How firms assign workers to tasks depends on factor prices for the two skill types and the productivity advantage of high-skilled workers in the performance of complex tasks. I study the firms’ assignment problem under two labor market regimes, which capture the polar cases of fully flexible wages and a binding minimum wage for low-skilled workers. Since the minimum wage lowers the skill premium, it increases the range of tasks performed by high-skilled workers, which enhances the stock of knowledge within firms to solve complex tasks and reduces the mass of active firms. In a setting with fully flexible wages trade does not affect the firm-internal assignment of workers to tasks. On the contrary, if low-skilled wages are fixed by a minimum wage, trade renders high-skilled workers a scarce resource and reduces the range of tasks performed by this skill type with negative consequences for the human capital stock within firms. In this case, trade leads to higher per-capita income for both skill types and thus to higher welfare in the open than in the closed economy, whereas – somewhat counter-intuitive – inequality between the two skill types decreases, as more low-skilled workers find employment in the production process.

Further data

Item Type: Article in a journal
Refereed: Yes
Institutions of the University: Faculties
Faculties > Faculty of Law, Business and Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics II
Faculties > Faculty of Law, Business and Economics > Department of Economics > Chair Economics II > Chair Economics II - Univ.-Prof. Dr. Hartmut Egger
Result of work at the UBT: Yes
DDC Subjects: 300 Social sciences > 330 Economics
Date Deposited: 03 Aug 2016 07:41
Last Modified: 19 Aug 2016 06:18
URI: https://eref.uni-bayreuth.de/id/eprint/34055