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Economic opening and the demand for skills in developing countries: A review of theory and evidence

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  • David O'Connor
  • Mariarosa Lunati

Abstract

A policy reform such as trade liberalisation can accelerate structural change in an economy, causing an exogenous shift in relative factor demands. For some developing countries, the result may be an increase in skills demand associated with the adoption of newly available foreign technology and lower-cost imported capital goods. This demand shift may be permanent or only temporary, but in either case the skills supply should eventually increase in response to higher returns. One concern, however, is that with an initially highly skewed distribution of education the skilled labour supply adjustment may be prolonged; likewise any transitional increase in skill-based wage inequality.

Suggested Citation

  • David O'Connor & Mariarosa Lunati, 2008. "Economic opening and the demand for skills in developing countries: A review of theory and evidence," OECD Journal: General Papers, OECD Publishing, vol. 2008(1), pages 1-31.
    • Handle: RePEc:oec:packab:5kzg67fgd1r7
    DOI: 10.1787/gen_papers-v2008-art3-en
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    Cited by:

    1. Jalil, Abdul, 2012. "Modeling income inequality and openness in the framework of Kuznets curve: New evidence from China," Economic Modelling, Elsevier, vol. 29(2), pages 309-315.
    2. Hrushikesh Mallick & Mantu Kumar Mahalik & Hemachandra Padhan, 2020. "Does globalization exacerbate income inequality in two largest emerging economies? The role of FDI and remittances inflows," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(4), pages 443-480, December.

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