The Changing Relative Price of Skill-Intensive Goods
Based on the conceptual results of Findlay, Grubert (1959) and Krugman (2000) we analyze
the movement of the relative price of skill-intensive goods under skill-biased technological
change and the countervailing effect of increasing world-wide supply of low-skilled-labor.
While the labor supply effect has become more important in the last two decades, we show
that the distinction between large and small technological progress is crucially important for
analyzing the changing pattern of relative price developments.