Population aging and the dynamics of the skill income gap: An analysis of a multiple mediation effect

This paper investigates how population aging influences the skill income gap via two pathways: the skill supply and skill-biased technical changes. Utilizing both simple and multiple mediating effects models for empirical analysis, this paper discovers that an increase in the old-age dependency ratio and a decrease in the child dependency ratio both elevate the relative supply of skilled labor and intensify skill-biased technical changes. These changes result in a dual effect: the augmented skilled labor supply reduces the skill income gap, whereas the enhanced skill-biased technical changes raise it. Among these two mechanisms, the impact of skill supply emerges as slightly more significant.