We evaluate the effect of technology, demographics and policy on the
differential evolution of the skill premium and on the rise in education
investment in France and the USA. For that purpose we use a computable
general equilibrium model with overlapping generations of individuals, and
endogenous education decisions. Human capital is made of two substitutable
components, experience and education, both of them evolve endogenously over
time. We calibrate this model on the post-war period and run counterfactual
experiments to assess the effect of the different exogenous variables.
French expansionary education policy boosted the supply of skills and kept
the skill premium low. On the contrary, increasing education costs in the US
contributed to increase wage differentials by reducing the supply of skills.
Also the skill biased technical shock appears delayed in France.