Trade,Skill Biased Technical Change and Wage Inequality in South Africa

Trade openness influences the wage structure via technology adoption in middle income countries. Given the econometric challenges of handling endogenous trade and technology interaction, we offer an alternative quantification based on calibration of a general equilibrium model. We expand the standard open economy Ramsey model to include comparative advantage, technology adoption and skill bias influenced by investment decisions. The calibration constructs a reference path for South Africa and allows counterfactual analysis of trade openness. The quantitative results imply that trade effects via technology adoption and skill bias can be an important determinant of wage inequality in middle income countries.     

International knowledge spillovers and wage inequality in developing countries

In this paper, international knowledge spillovers are incorporated in a horizontal innovation model, designed to explain the observed uncertain effects that openness of trade can have on wage inequality in small developing countries. Openness of trade can produce two different effects: an increase in the relative price of less-skilled labor-intensive products and a wider skill discrepancy due to knowledge spillovers from the more to less developed country. The former triggers a fall in the wage premium, while the latter widens the wage premium gap in a developing country. These two opposing forces explain the observed uncertain effects of openness to trade on wage inequality in developing countries.     

Gender Inequality and Trade*

The paper empirically explores the international linkages between gender inequality and trade flows of a sample of 92 developed and developing countries. The focus is on comparative advantage in labor‐intensive manufactured goods. The results indicate that gender wage inequality is positively associated with comparative advantage in labor‐intensive goods, i.e. countries with a larger gender wage gap have higher exports of these goods. Also, gender inequality in labor force activity rates and educational attainment rates are negatively linked with comparative advantage in labor‐intensive commodities.     

Globalization and inter‐industry wage differentials in China

This paper explores the relationship between globalization and inter‐industry wage differentials in China by using a two‐stage estimation approach. Taking advantage of a rich household survey dataset, this paper estimates the wage premium for each industry in the first stage conditional on individual worker and firm characteristics. Alternative measures of globalization are considered in the second stage: trade openness and capital openness. A disaggregation of trade into trade in final and intermediate goods shows that increases in import (export) shares of final goods reduce (increase) the wage premia significantly, whereas imports or exports of intermediate goods do not explain differences in industry wage premia. This finding is supported by stronger effects for final goods trade in coastal than noncoastal regions. Our results also show a positive relationship between capital openness and industrial wage premia, though this finding is less robust when potential endogeneity issues are allowed for.     

Regional origins of employment volatility: evidence from German states

Greater openness for trade can have positive welfare effects in terms of higher growth. But increased openness may also increase uncertainty through a higher volatility of employment. We use regional data from Germany to test whether openness for trade has an impact on volatility. We find a downward trend in the unconditional volatility of employment, paralleling patterns for output volatility. The conditional volatility of employment, measuring idiosyncratic developments across states, in contrast, has remained fairly unchanged. In contrast to evidence for the US, we do not find a significant link between employment volatility and trade openness.     

Revisiting the Relevance of International Trade Theory

Probably one of the most controversial contributions to the literature of international trade theory was offered by the late social economist John Culbertson. In his view, low wage competition among corporations in a world characterized by capital mobility and massive trade deficits undermines the foundation trade theory based on David Ricardo’s celebrated notion of comparative advantage. Instead, there are several good reasons to believe that international trade with China, India, Vietnam, etc. will be governed by absolute advantage. The current essay is dedicated to the virtually ignored work of Culbertson, and it is meant as an invitation for social economists to critically evaluate the argument and in the process make an attempt to point out where it goes wrong.     

MACROECONOMIC VOLATILITY AND INTERNATIONAL INTEGRATION

This paper explores the effects that varying degrees of international openness have on macroeconomic volatility. The analysis is conducted for a two‐symmetric‐country world under three levels of international integration: that of a closed economy, a financial autarky, and full financial integration. Different degrees of trade openness are considered in the form of home biases, while the economy is left vulnerable to total factor productivity and innovation shocks. Full financial integration is found to reduce firm‐size volatility and volatility in the mass of operative firms following a productivity shock and to increase them after an innovation shock. Moreover, the interaction between international sharing of profits and terms of trade transmissions determines the non‐linear behaviour of consumption‐to‐output ratio volatility found in empirical studies.     

自然开放度、政策导向开放度与劳动生产率提升——理论和基于中国省际面板数据的实证研究

本文以李嘉图模型为基础,分析了贸易开放对提升中国劳动生产率的效应。本文使用1994-2005年间中国省际面板数据,就贸易开放对提升中国劳动生产率水平所产生的效应进行了实证研究。本文得出两个重要的分析结果:第一,贸易开放可以通过比较优势来确定一国专业化产品的生产,如果一国的比较优势存在于干中学系数较大的部门,贸易开放将提高劳动生产率;但若一国的比较优势存在于干中学系数较小的部门,贸易开放将降低劳动生产率;第二,本文将贸易开放度分解为自然开放度和政策导向开放度,结果发现,当自然开放度较小时,政策导向开放度的增加将降低劳动生产率;当自然开放度较大时,政策开放度的增加将提高劳动生产率水平。     

贸易开放与性别工资差距

本文在不完全竞争市场环境下,建立贸易开放和性别工资差距的数理模型。在理论分析的基础之上,本文运用2002年中国家庭住户收入项目调查数据(CHIP)进行实证分析。在控制了年龄、婚姻状况和受教育年限等个体层面和人均GDP等城市层面的工资影响因素情形下,得出结论:贸易开放在总体上拉大了性别工资差距;贸易开放缩小了高技能劳动力的性别工资差距,拉大了低技能劳动力的性别工资差距。从某种意义上说,女性弱势群体更容易被排除在贸易开放的利益之外。因此,提高女性的受教育程度,并为之提供相应的制度保障具有尤为重要的政策含义。     

Trade openness reduces growth volatility when countries are well diversified

This paper addresses the mechanisms by which trade openness affects growth volatility. Using a diverse set of export concentration measures, we present strong evidence pointing to an important role for export diversification in conditioning the effect of trade openness on growth volatility. Indeed, the effect of openness on volatility is shown to be negative for a significant proportion of countries with relatively diversified export baskets.     

Inflation and Openness with Non‐Atomistic Wage Setters

This paper analyses the impact of trade openness on inflation in a strategic framework characterised by monopolistic production in the domestic sector and unionised labour markets. By stressing the interplay between internal and external sources of economic distortion, we show that the economy's inflationary bias reduces up to a critical level of trade openness. Beyond this threshold, wage setters may be induced to behave more aggressively in open economies, leading to higher equilibrium inflation. Based on a regression analysis that investigates the combined effect of labour market institutions and openness on inflation across nineteen OECD economies, we show that inflation is negatively related to openness when wage bargaining is decentralised, while there is virtually no link between openness and inflation at higher levels of wage centralisation.     

论比较优势的成本基础——从生产成本向“全成本”的拓展

贸易理论的历史演进表明,比较优势是一国参与国际分工和贸易的基本动因。古典、新古典和新贸易理论分别从劳动生产率、要素禀赋、生产规模等不同视角论证了基于生产成本的比较优势,进而可表达为"相对生产成本不等式"。随着制度、生态环境、"可持续性"等要素在国际贸易中日趋重要,使用制度要素所形成的交易成本、使用生态环境要素所形成的环境成本、耗费"可持续性"要素所形成的代际成本也逐步成为比较优势的成本基础。于是,可将使用或耗费广义要素的代价理解为"全成本",它构成了一国参与国际分工和贸易的比较优势的基础。     

Convergence patterns and switchovers in comparative advantage

Although there exists a vast literature on convergence and divergence of income levels across countries or regions at the aggregate level, there is only little work on convergence and/or divergence processes of productivity and wage levels at the more disaggregated industrial level. These are especially important in the context of international trade as these determine the dynamics of comparative advantages and the resulting trade structures between developing and developed countries. In the first theoretical part, we discuss some theoretical aspects of uneven sectoral productivity and wage catching-up processes and their links to dynamic comparative advantages and trade structures. In the second part, we present an econometric study of catching-up of wages, productivity, and labour unit costs. The analysis is conducted at the industrial level (ISIC 3-digit) over the period 1965–1992 for a set of catching-up economies compared with more advanced countries.     

Effects of North–South trade on wage inequality and on human-capital accumulation

This paper develops an endogenous growth model with technological knowledge directed towards high- versus low-skilled labour, augmented with North–South international trade of intermediate goods and with human-capital accumulation, to analyse how trade affects wage inequality and the inter-country human-capital gap. Trade is a vehicle for inter-country technological-knowledge diffusion and human-capital accumulation interacts with the intra-country direction of technological knowledge arising from trade. In contrast with the market-size effect, stressed in the skill-biased technological change literature, the operation of the price channel following openness to trade predicts, in line with the recent trends in developed and developing countries, an increasing technological-knowledge bias towards high-skilled human capital. This, in turn, decreases inter-country gaps of technological knowledge and human capital and increases intra-country wage inequality. Also in line with recent empirical evidence, inter-country wage convergence is induced by the trade-opening level effect.     

Output volatility,composition of trade,and transmission of economic shocks across countries

In this paper we investigate how supply and demand shocks in one country affect output volatility in other countries. While the evidence for cross‐country transmission of demand shocks is mixed, we find that volatile supply in one country leads to larger imports and output volatility in other countries. As a result, the effect of trade openness on output volatility is highly heterogeneous across countries and depends on the composition of their trade. Those countries whose imports originate in economies with volatile supply experience a greater impact of trade on output volatility.     

The Manufacturing Wage Inequality in Latin America and East Asia: Openness, Technology Transfer, and Labor Supply

This paper examines wage inequality in the manufacturing sector for a panel of Latin American and East Asian economies during the last three decades. A labor supply and demand model is presented where three main determinants of wage inequality are investigated: trade openness, technology transfer, and labor supply. Findings indicate that wage inequality in the two regions has responded differently to the various determinants enumerated above. Some lessons from the comparative experience of the two regions are drawn.     

A Neo-Heckscher–Ohlin Model of Trade with Endogenous Production Patterns*

We propose a Neo-Heckscher–Ohlin (HO) model of trade that combines comparative endowment advantage, comparative technological advantage, international capital mobility and trade costs. Using an inframarginal approach, we produce a partition of the exogenous parameter space in a host of parameter value subsets that demarcate the various equilibrium patterns of production and trade. The results are startling! They suggest that production within the diversification cone – a key assumption of the Heckscher–Ohlin theory that is required for its core propositions (such as factor price equalisation) to hold – may only prevail on the razor's edge, or under exceptional circumstances. In addition, our findings nominate a mechanism by which improvements in transaction efficiency facilitate international trade thereby stimulating cross-country division of labour. Contrary to other generalisations of the Heckscher–Ohlin (such as the various derivatives of the Kemp–Jones model of trade), our model does not assume a purely Ricardian character: comparative endowment advantage may determine the pattern of trade even in the presence of opposing technological differences, as long as total factor productivity coefficients adjusted for transaction efficiency and factor intensity do not confer unambiguous comparative (technological) advantage. Still, ‘intensity-efficiency’-adjusted comparative technological advantage supersedes factor endowments in determining the flow of trade.     

An Empirical Analysis of Australian Labour Productivity

This study presents a model capturing sources of Australian aggregate labour productivity using annual time series data from 1970 to 2001. Labour productivity, or real output per hour worked, in this model is determined by real net capital stock in information technology and telecommunications (ITT), real net capital stock in the non-ITT sector, trade openness, human capital, the wage rate, international competitiveness, and the union membership rate. Given the lack of long and consistent time series data, multivariate cointegration techniques are inappropriate as the cointegration results will be sensitive to the lag length, the inclusion or exclusion of the intercept term or a trend in the cointegration equation and/or the vector autoregression (VAR) specification. Therefore, the Engle-Granger representation theorem and the Hausman weak exogeneity test have been employed to determine the short and long-term drivers of Australian productivity. Empirical estimates indicate that, in the long-term, policies aimed at promoting various types of investment, trade openness, international competitiveness, and the use of wage as a stimulant in a decentralised wage negotiation system, will improve labour productivity. In the short term, all the above variables except for human capital and labour reforms, which both need more time to evolve, determine productivity performance.     

中欧服务业产业内贸易实证研究

由服务贸易的比较优势和产业内贸易研究概况,引出对中欧服务业产业内贸易的实证分析。基于2004～2009年中欧服务贸易数据测算出GL指数和MIIT指数,发现了各服务部门产业内贸易发展的不同态势。选取人均GDP、服务贸易开放程度和对外贸易不平衡程度作为自变量,即影响因素,但均未表现出与产业内贸易指数较强的相关性。     

Firm heterogeneity and Ricardian comparative advantage within and across sectors

This paper incorporates Melitz’s Econometrica (71:1695–1725, 2003) heterogeneous-firm trade model in the Ricardian model of comparative advantage with a continuum of sectors introduced by Dornbusch et al. (Am Econ Rev 67(5), 823–839, 1977). In particular, we characterise the equilibrium outcomes when neither sectors nor countries are symmetric. We find that trade patterns can follow Ricardian comparative advantage, while wage rates are proportional to market size due to a home market effect. Interestingly, trade liberalisation hurts the large country but benefits the small one by reducing the number of sectors with two-way trade and expanding those with specialised (one-way) trade. I would like to thank Mike Artis, Richard Baldwin, Frederic Robert-Nicoud, Matthias Helble, Giovanni Facchini, Thierry Verdier and a referee for their helpful comments and suggestions. Also I would like to thank Mike Artis for his excellent proof reading.