Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/34567 
Authors: 
Year of Publication: 
2007
Series/Report no.: 
IZA Discussion Papers No. 2708
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
While the skill-premium has been rising sharply in the US and the UK for 20 years, the Dutch skill-premium decreased for much of that period and only started to rise in the early 90s. In this paper, we investigate whether the Dutch skill-premium will rise in the next decades. To answer this question, we forecast the skill-premium using the Katz and Murphy (1992) and the Krusell et al. (2000) models. The Katz and Murphy model (KM) explains demand shifts by skill-biased technological change in unobservable variables captured by a time trend. In contrast, the Krusell et al. model (KORV) explains demand shifts by (observable) changes in the capital stock under a capital-skill complementarity technology. The results show that while the KM model predicts that the skill-premium will have increased by 30% in 2020, based on realistic predictions of the stock of capital, the KORV model predicts that the skill-premium will remain between -5% and +5% of its 1996 level.
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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