Specialization, outsourcing and wages

This paper studies the impact of outsourcing on individual wages. In contrast to the standard approach in the literature, we focus on domestic outsourcing as well as foreign outsourcing. We argue that if outsourcing is associated with specialization gains arising from an increase in the division of labor, domestic outsourcing tends to increase wages for both unskilled and skilled labor. We use a panel data set of workers in Danish manufacturing industries to show that domestic and foreign outsourcing affect wages as predicted.      

Export Activity,Firm Size and Wage Structure: Evidence from Taiwanese Manufacturing Firms*

This study adopts a semiparametric smooth coefficient model to evaluate the export–wage premiums, firm size–wage premiums, and the wage gap between skilled and unskilled labor. Particular focus is placed upon widespread evidence indicating that pay levels in ‘large’ and ‘export‐oriented’ firms are higher than in their ‘small’ and ‘domestic‐oriented’ counterparts. Applying the firm‐level data for Taiwanese manufacturing firms, we find a positive export–wage premium for skilled workers and a negative export–wage premium for unskilled workers. The hypothesis of a constant export premium across firm size is rejected. While most of the export–wage premiums for skilled labor can be attributed to the small and medium firms, the large exporting firms have a significant adverse effect on wages for unskilled labor. Moreover, our results suggest that the firm size–wage premiums for skilled workers are larger than those for unskilled workers. The wage gap between the two skill groups is also sensitive to size categories.     

外包与工资差距——基于工业行业数据的经验研究

本文首先检验了国际外包对我国熟练劳动力与非熟练劳动力工资差距的影响.计量结果表明,与斯托尔帕-萨缪尔逊定理所揭示的相反,外包贸易降低了我国相对丰裕的非熟练劳动力的相对工资.微电子设备的使用也加大了对熟练劳动力的需求,进一步加大熟练劳动力与非熟练劳动力的工资差距.为了检查是否是因为贸易形态的变化所导致的结果,我们进一步检...     

Wage increases, wage convergence, and the Lewis turning point in China

We examine the wage trends of ordinary workers and the wage convergence between unskilled and skilled workers in China. First, we find that wages in all non-agricultural sectors, wages of migrant workers, and wages of hired workers in the agricultural sector have increased dramatically since 2003. Second, through comparing wage differentials between migrant and urban resident workers and between heterogeneous education groups within migrant workers, and by investigating the changes in the contribution of the returns to education to wage differentials, we find that the wages of unskilled and skilled workers have converged. Both the increasing wage trends and wage convergence are interpreted as evidence supporting the hypothesis that China has passed what can be called the Lewis turning point in the industrial sector. We conclude that the sustainability of economic growth in China requires an upgrading of labor market institutions to accommodate the merging of the rural and urban labor forces.     

Black male unemployment

Public policies intended to raise the wages of unskilled workers, equalize educational opportunity, stabilize employment, and increase imports were sources of the growth of unskilled and, therefore, of black unemployment since 1950. The wartime wage-equalization policy and postwar minimum-wage policies raised the cost of unskilled labor relative to that of capital and of skilled labor. The Fed's inflationary full-employment policy between 1950 and 1970 reduced real interest rates relative to unskilled wages. Subsidies for higher education increased the supply of skilled labor, reducing its cost relative to that of unskilled labor. Trade liberalization increased imports of manufactured goods from developing countries, which displaced U.S. unskilled labor.     

关于中国劳动力工资、产业结构和收入差距的实证研究

本文基于GTAP模型,模拟了中国劳动力工资水平的外生上涨对社会贫富差距以及劳动密集型产业转移的影响。通过研究发现：非熟练劳动力密集型产业的普通工人工资的外生上涨无助于解决中国的收入差距问题,反而非熟练劳动力密集型产业在国际间的转移,会使中国有了更高的失业率,甚至有可能使收入差距扩大。     

Appropriation,firm dynamics,and wage inequality

This paper examines the income distribution and welfare effects of appropriation activities in an economy. In the short run, with a given number of firms, appropriation can narrow wage inequality between skilled and unskilled labor when the capital resources accrued by appropriators are not large. However, wage inequality widens when the capital accrued is large. In the long run, with free entry and exit of firms, an increase in appropriation can cause firms to enter when the accrued capital is not large. This gives rise to a win–win outcome by raising the wages of skilled and unskilled labor. However, if accrued capital is large, firms exit and a lose–lose situation may occur in which skilled and unskilled wages are reduced.     

Trade liberalization and the wage gap: the role of vertical linkages and fixed costs

This paper studies the labor market impacts of trade liberalization, and specifically tariff reductions, with a focus on the wage gap between skilled and unskilled workers in presence of vertical linkages in the fixed costs of production. To that purpose, we develop and empirically test a monopolistic competition model with variable elasticity of substitution and labor differentiated by skill level, where skilled workers are the residual claimants of savings on imported inputs. Consistently with the model predictions, we find that a 10% reduction in tariffs implies on average a 3.8% increase in the wage gap. In addition, the same level of tariff reduction is expected to lower unskilled employment in domestic production by 3.3%, which is partially offset by an expansion of unskilled employment in the export segment of production. These results are obtained matching detailed international trade data with World Input–Output Tables and EU KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.     

Global Outsourcing and Wage Inequality in Middle-Income Countries: Evidence from South Korea

A substantial number of studies have suggested that global outsourcing can induce wage inequality. As Feenstra and Hanson [(1996a) Foreign investment, outsourcing, and relative wage, in: R. C. Feestra, G. M. Hanson, and D. A. Irwin (Eds.) Political Economy of Trade Policy: Essays in Honor of Jagdish Bhagwati (Cambridge: The MIT Press), pp. 89–127] argued, global outsourcing is comparable to skill-biased technological change in that global outsourcing is more likely to increase the wage of skilled workers rather than their unskilled counterparts. We examine the effects of outsourcing on wage of skilled and unskilled workers in Korea's manufacturing sector with a focus on the dissimilar effects of outsourcing to developed countries (DCs) and less developed countries (LDCs) on relative wage. The results of system and difference GMM estimation based on manufacturing data from 1992 to 2006 indicate that outsourcing to DCs and LDCs have opposite (and significant) effects on relative wage, that is, outsourcing to DCs (LDCs) decreases the wage of skilled (unskilled) workers.     

Enter the Dragon: Have Imports from China Hurt Wages in Manufacturing?

While it is often argued that imports from China are depressing manufacturing wages in recipient countries, this has never been tested using cross‐country data. This article investigates the effect of increased import penetration from China on the wages of workers (total, skilled and unskilled) in the manufacturing sector of 100 economies from 1976 to 2008. The econometric analysis finds no evidence suggesting that import penetration of manufactured goods from China has a statistically significant effect on real manufacturing wages (skilled, unskilled and total) in either developed or developing economies. This may be because Chinese exports are too heterogeneous to strongly affect any particular industry in recipient economies or because foreign consumers are differentiating products made in China from those made locally based on country and brand loyalty and preconceived notions of quality.     

Trade liberalization and wage inequality: Evidence from Korea

This paper investigates the heterogeneous income distribution effects of trade liberalization using Korean survey data from years of 2000–2015. Following the Stolper-Samuelson theorem most of previous research studying the effects of trade liberalization on wage differences focus on workers’ characteristics (e.g., skilled or unskilled) while heterogeneity within the same worker group has not been yet substantially investigated. To fill this gap, this paper provides empirical evidence of wage inequality across firms within the same group of workers caused by trade liberalization, potentially implied in the new-new trade models with firm heterogeneity. Employing a difference-in-differences (DID) specification, we find that the wages of unskilled workers in Korea have increased since its FTAs with more advanced countries, such as members of EU and the US, came into effect, while the effects on the wages of skilled workers are negative but not statistically significant. We also show that wage effects are heterogeneous across firms within unskilled and skilled worker groups, while the positive effects are statistically significant and largest for unskilled workers in medium-large sized firms. These findings are in line with both traditional and new-new trade models.     

Work and Wages at a Melbourne Factory,the Guest Biscuit Works 1870–1921

The story of wages in nineteenth‐ and early twentieth‐century Australia has largely been told through official published statistics and the experiences of skilled artisans and construction labourers. Utilising wage book data from an early successful manufacturing plant – a biscuit factory – we reveal the earning histories of several neglected groups of Australian workers. We specifically investigate the effects of the 1890s depression, the introduction of a wages board, and shifting demographics on the wages of unskilled factory hands, women, juvenile workers, and commercial clerks. We demonstrate that typical Australian wage series studies have misinterpreted the impact of these phenomena.     

Migration,FDI, and Welfare

We investigate migration and foreign direct investment (FDI) for a small trading economy. Historically, immigration in small countries has been accompanied by FDI inflows (complementary capital movements). Based on the skill composition of migrants, empirical evidence finds that skilled immigration is accompanied by FDI inflows but unskilled immigration is accompanied by FDI outflows (substitutable capital movements). We prove that the Heckscher-Ohlin model cannot reconcile these apparently contradictory observations. We introduce a theoretical model in which capital and unskilled labor are sector specific, and demonstrate that this model can reconcile the historical and empirical observations on migration and FDI.     

Institutions, wages, and inequality: The case of Europe and its periphery (1500–1899)

This paper explores the long-run relationship between institutions and wage outcomes in Europe and its periphery. I find that cities that exercised stronger institutional protection of private property experienced: (i) higher levels of both skilled and unskilled real wages, as well as (ii) lower levels of inequality as measured by the skilled–unskilled wage ratio. While the first result corroborates existing work on the positive growth effects of better institutions, the second finding is more novel to the literature. Some explanations are proposed for how stronger institutions can cause an increase in the relative supply of skilled workers, thus lowering wage inequality.     

Macroeconomic and Sectoral Effects of International Trade: A Vector Error-Correction Study

This study examines various claims that in the U.S., international trade has contributed to a loss of manufacturing base, an increased gap between unskilled and skilled wages, lower employment, and a loss of productivity. Cointegration tests indicate that in the long run and at the macro level, the ratio of trade to output and FDI to output are correlated with the manufacturing share of output, the ratio of unskilled to skilled wages, labor productivity, and the employment rate. However, Granger causality tests reveal that, with one exception, causation does not run from trade to the domestic variables, the only exception being that FDI Granger causes productivity. When the focus is shifted to the manufacturing sector, the results support the proposition that openness to trade has had adverse effects on this sector.A slightly different version of this paper was presented at the Fifty-sixth International Atlantic Economic Conference, October 16–19, 2003 in Quebec City, Canada. The research reported in this paper is partially funded by a grant from the Institute for Global Economic Affairs at Marquette University.     

Unemployment information and wives’ labor supply responses to husbands’ job loss in Taiwan

Motivated by declining labor market opportunities in Taiwan, this study examines adjustments to wives' work patterns based on husbands' job loss for both unskilled and skilled labor families. Explicitly taking information acquired before job losses into account, married couples' dynamic labor supply equations are estimated by using a short pseudo-panel data set of Manpower Utilization Survey (MUS) in Taiwan during the period of 1993–2006. Our results indicate that the AWE in skilled families exhibits almost twice as big as those in unskilled families. When husbands' job loss is compounded with district- or industry-specific unemployment information, wives have slightly higher probabilities of labor force entry than those in the traditional model, and the probabilities increase with the length of observation. A comparison of the asymmetric response of the unskilled and the skilled wives suggests that facing husbands' job loss, unskilled wives respond to both economic downturns and upturns, but skilled wives only respond to economic downturns.     

TRADE LIBERALIZATION AND WAGE PREMIUM IN ARGENTINA: THE ROLE OF TRADE FACTOR INTENSITY

During the 1990s, several Latin American countries implemented policies directed to the removal of barriers on international trade. However, there is a perception that reforms, especially trade liberalization, failed to deliver on their promises, easing the way for policies aimed at reversing some of them. Following Wood's hypothesis, we allow for the effects of liberalization to vary, depending on the skill intensity of production. The evidence confirms that the role of trade liberalization has been relatively small, but controlling for the presence of endogeneity gives larger estimates. Contrary to previous evidence, the wage premium of skilled workers was more sensitive to the increase of skill‐intensive exports than to that of unskilled‐intensive imports.     

Non-traded Goods,Technical Progress and Wages

We use a general equilibrium model of trade to show that technical improvement may indeed cause a fall in the wages of unskilled workers. Under some modest conditions, the wages of skilled workers may go down too.

我国工资差距的影响因素分析——基于制造业面板数据的研究

本文借鉴成本函数的研究方法,采用我国1993～2010年19个工业细分行业的相关数据考察了影响熟练劳动与非熟练劳动相对工资变化的因素。通过计算行业的VSS和回归估计发现,国际贸易和技术进步才是拉动我国相对工资差距的主要原因,外包对相对工资差距起到微弱的缩小作用。根据行业的要素密集度,本文继续将工业行业划分为3个子样本,进一步考察了这些因素对不同要素密集型部门的相对工资的影响,结论与总体回归基本一致。本文的结论与理论预期的不一致,可能是由中国劳动力市场的特殊性和中国加工贸易的特点决定的。     

Productivity Gains from Offshore Outsourcing: Evidence from the Chinese Manufacturing Industry

Using the Cobb–Douglas production function and vertical specialization share, the present paper measures the productivity spillover effects of offshore outsourcing in the Chinese manufacturing industry. We examine different production factors and the degree of openness by dividing the Chinese manufacturing industry into five major categories: capital‐intensive business, technological‐intensive business, labor‐intensive business, open business and non‐open business. The results show that offshore outsourcing is positively associated with productivity in the Chinese manufacturing industry as a whole, but less so in labor‐intensive industries and more in capital‐intensive industries. Moreover, the positive impact of outsourcing on productivity is slightly higher in open industries than in non‐open industries. These results shed light on the differential spillover effects of offshore outsourcing on productivity. Our findings suggest that outsourcing structure is important to China's long‐run competitive advantage. China's policy‐makers should encourage further offshore capital‐intensive and technology‐intensive activities and focus more on outward‐oriented offshore businesses.