Why should we be concerned about balancing the supply and demand of skilled workers?

Abstract

This study explores the dynamics between technological advancements, educational reforms, and their consequent impact on the labor market in Chile over 1980–2018 reported by Campos-González and Balcombe (2024). The authors analyze the evolution of the skill premium in response to significant policy changes and global technological trends revealing a pivotal shift in the Chilean labor market: the transition from a technology-driven phase, where rapid technological advancements heightened the demand for skilled labor in the pre-2000 period, to an education-driven phase post-2000, marked by comprehensive educational reforms. These reforms effectively increased the supply of educated workers, leading to the stabilization, and posterior decrease of the skill premium. The authors contribute to the broader understanding of how nations can navigate the challenges posed by the digital age, providing valuable insights for policymakers and educators in fostering equitable and sustainable economic growth. The study’s findings are particularly relevant to emerging economies undergoing similar transitions, offering a framework for policy formulation that synchronizes educational advancements with technological progress to ensure inclusive economic development.