Trade,Wages, and Specific Factors*

In this paper, we use a multisector specific‐factors model with sector‐specific capital and two mobile factors, skilled and unskilled labor, to examine the effects of trade, technology, and factor endowments on the skill premium in US manufacturing industries. Based on this model and data for the US manufacturing sector from 1958–96, we calculate changes in the skill premium and then carry out a decomposition to identify the changes caused by product price changes (trade), technological progress, labor, and capital endowment changes. The decomposition reveals that trade effects, working through product price changes, caused the skill premium to increase moderately. Changes in capital endowments (new investments) had a positive effect on the skill premium, with the strongest impact during the 1980s, while the effect of technological change on the skill premium varied over time. Finally, changes in relative labor endowments had a negative effect on the skill premium.     

人工智能技术对制造业资本溢价与技能溢价影响的区域异质性研究

人工智能技术会影响资本溢价和技能溢价的观点在国际上已经达成共识,但没有形成统一的研究结论。在我国劳动收入份额持续走低的形势下,有必要探讨人工智能技术对资本溢价和技能溢价带来的影响。文章聚焦我国制造业,构建资本溢价和技能溢价的内生模型,数理演绎人工智能技术对二者的影响机制,并根据我国情势分别对人工智能技术应用先发地区和后发地区的资本溢价和技能溢价走势提出命题,基于我国制造业1993-2019年的省际数据,应用四方程标准化供给面系统法进行了实证检验,进一步地,区分先发地区和后发地区对人工智能技术影响资本溢价和技能溢价的直接效应和偏效应进行了回归分析。研究结果表明：先发地区资本溢价呈微降趋势,技能溢价呈现显著极化态势；后发地区资本溢价呈上升趋势,技能溢价处于”U”型低谷区。相较于后发地区,先发地区资本溢价和技能溢价对人工智能技术的反应更敏感、作用效果更强,且人工智能技术可以通过要素结构、技术效率结构缓解资本溢价水平；人工智能技术可以通过劳动结构、技能效率结构增强技能溢价水平。     

Data deepening and nonbalanced economic growth

As a newly emerging factor, data can promote economic growth by driving technological progress, and nonbalanced growth between digital industries and nondigital industries has been notable in recent years. This paper provides a novel growth model with two sectors that differ in the degree of data deepening and the factor structure of the production function. In the model, data in one sector is the by-product of economic activities not only in its sector, but also in the other sector. More importantly, data utilization within and across sectors can spur new ideas and promote technological innovation. The model indicates that increases in the stock of data in the two sectors have opposite effects on the allocation of skilled labor between the two sectors. The skill premium (the wage of skilled labor relative to the wage of unskilled labor) decreases with an increase in the fraction of skilled labor employed in the data-extensive sector. With credible parameter values, model calibration shows that faster growth of output occurs in the more data-intensive sector and the high skill premium persists in the long run.     

Capital–Skill Complementarity: Does Capital Composition Matter?

We estimate the effect of capital composition on the size of capital–skill complementarity and the skill wage premium. Disaggregating the capital stock into different types according to technological content, we find that: capital is more of a q‐complement to skilled labor than to unskilled labor; the higher the technological component of capital, the larger the size of the relative q‐complementarity between capital and skilled labor; and replacing non‐technological with technological capital might increase the skill wage premium by about 9 percent. Our results highlight that changes in capital composition matter for understanding changes in the skill wage premium.     

International Outsourcing and the Sector Bias: New Empirical Evidence

Considering labor market effects of international outsourcing on more disaggregated industry levels, a sector bias appears showing that low skilled labor receives a wage premium when international outsourcing takes place in low skill‐intensive industries. However, there is no empirical evidence supporting this pattern. Applying a panel data analysis for Germany, this paper provides new empirical evidence for the existence of the sector bias of international outsourcing: significant results confirm the decreasing wage gap if international outsourcing takes place in low skill‐intensive industries. If international outsourcing takes place in high skill‐intensive industries, the wage gap increases.     

Inter- and intracountry effects of the Covid-19 pandemic on wages and economic growth

This paper aims to investigate the impact of the Covid-19 pandemic on technological knowledge, wage inequality, and economic growth, by proposing a Direct-Technical-Change model with two economies, an Innovative and other Follower. Six hypotheses are considered: (i) decrease in the unskilled-labor supply, (ii) decrease in the absolute advantage of unskilled labor, (iii) decrease in the intensity of the unskilled sector, (iv) hypothesis (i) combined with a lower decrease in the skilled-labor supply, (v) hypothesis (ii) combined with a lower decrease in the absolute advantage of skilled labor, (vi) all the variations previously considered. By comparing the steady states before and after the shock, we find an increase in the technological-knowledge bias that favors the skill-intensive sector, which positively affects the skill premium. However, in hypotheses (i) and (iv), the decrease in the relative supply of unskilled labor dominates the effect on the skill premium, which thus decreases. The economic growth rate is always penalized except for hypothesis (iii). Hypotheses (ii) and (iv) are undesirable because they increase wage inequality and penalize economic growth. Governments should support innovative activity, the engine of technological-knowledge progress, and thus economic growth, but with caution not to exacerbate the skill premium.     

Trade liberalization and the wage–skill premium: Evidence from Vietnamese manufacturing

This paper examines the wage–skill premium in Vietnamese manufacturing since the reform programme. The effects of tariff reductions on the wage–skill premium are analyzed in the presence of exporting opportunities, foreign investment, and research and development. The findings with firm‐level data reveal that a 10‐ percentage point fall in output tariffs is associated with a 4 percent increase in the wage–skill premium. The wage–skill premium in foreign‐invested enterprises is 40 percent higher than that of domestic enterprises. Trade liberalization influences the wage–skill premium in the presence of foreign ownership and R&D, while its impact on the skill premium only works through exporting.     

The Skill Premium, Technological Change and Appropriability

This paper demonstrates that an increase in the relative supply of educated workers generates a structural change in the production structure towards a knowledge-intensive production process. This structural shift may ultimately lead to an increase in the return to educated labor despite the increase in their supply. The paper argues that the steady increase in the supply of educated workers that most Western economies have experienced in recent decades may be viewed as the driving force behind the observed pattern of wage inequality. In particular, the paper demonstrates that if firms can appropriate a sufficient share of the intertemporal return from knowledge generating activities of their labor force, a gradual increase in the supply of skilled workers would generate only a temporary reduction in the skill premium followed by a permanent increase in the return to skill.     

The Rise of the Maquiladoras: A Mixed Blessing

Mexico experienced a tremendous expansion of its export‐processing maquila sector during the 1990s. Since one of the main objectives of the maquiladora program was to promote formal employment, we study how the rapid increase in maquiladora activity has affected labor market outcomes and welfare in Mexico. We develop a heterogeneous‐firm model with imperfect labor markets that captures salient features of the Mexican economy such as the differences between maquila and non‐maquila manufacturing plants and the existence of an informal sector. We calibrate the model's parameters to match key cross‐sectional moments characterizing the Mexican economy. We find that the expansion of the maquila sector during the 1990s was a mixed blessing for Mexico. Our quantitative model indicates that the skill premium decreased by 2.7%, informality increased by 0.9%, and overall welfare decreased by 3.7%.     

Wage inequality,segregation by skill and the price of capital in an assignment model

Some pieces of empirical evidence suggest that in the U.S., from the 1970s to the 1990s, (i) wage inequality between-plants rose much more than wage inequality within-plants and (ii) there was an increase in the segregation of workers by skill into separate plants. This paper presents a frictionless assignment model in which these two features can be explained simultaneously as the result of the decline in the relative price of capital. Additional implications of the model regarding the skill premium and the dispersion in labor productivity across plants are also consistent with the empirical evidence. The model permits to consider changes in the skill distribution too. Combining these changes with falling capital prices provides a more comprehensive view of the overall trend of wage inequality and of workers' segregation by skill in the data, and it helps explaining some episodes of decreasing wage inequality.     

UNION WAGE COMPRESSION AND SKILL ACQUISITION

In this paper, I examine the relationship between unionisation and total output in an economy with a dual labour market, heterogeneous agents, and human capital investment. My primary focus is the skill acquisition channel, through which unionization affects total output. I theoretically demonstrate that the skill premium, and thus human capital investment, is determined by the prevalence of unions in high‐ or low‐skill‐intensive sectors. In particular, if a low (high)‐skill sector is unionised, then the skill premium is higher (lower), ensuring a larger (smaller) high‐skill sector, irrespective of the unions bargaining power. To test this hypothesis, I also empirically investigate the effects of unionisation on total productivity. The results indicate that through the reallocation of labour, unionisation induces an expansion of high‐skill‐intensive sectors, while low‐skill‐intensive sectors contract.     

Impact of Chinese growth and trade on labor in developed countries

This paper examines the impacts of growth in China's economy and trade on the skill premium of labor in developed countries. We utilize a unique global dataset that disaggregates workers by occupations to identify impacts across labor categories with different skill sets, complementing the widely used GTAP Data Base in the CGE framework offered by the GTAP model. To study the impacts of China's fast-paced growth, we model the counterfactual, i.e., what if China grew and opened at a more modest rate; we then compare this baseline with China's actual growth. Results indicate that a strong rise in manufacturing exports from China to the US impacts output and employment in the US. The US shifts its production away from light manufacturing sectors to more service-oriented sectors that also tend to engage higher skilled labor. There is a small decrease in the real wages of unskilled labor and a rise in the real wages of skilled labor. Interestingly, not all categories of unskilled labor lose, rather those that are more directly linked with manufacturing sectors are impacted; unskilled ‘service and shop workers’ and the unskilled ‘agricultural workers, machine operators, assemblers, craft workers, and others’ observe a small decline in real wages, while the impact on unskilled ‘clerks’ is insignificant. For all categories of skilled workers, there is an increase in real wages primarily driven by the shift in production to services and high-skilled labor intensive categories, resulting in the rising skill premium. Hence disaggregating the labor data provides greater depth on the understanding of the differential impacts on domestic workers resulting from trade, and thereby guides policy on how these differential impacts can be smoothed through redistribution of benefits. Consistent with other study findings, there is a positive impact on overall growth and welfare in the US, EU and Australasia.     

Estimating the Income Gain of Seasonal Labor Migration

Male seasonal labor migration has become an increasing phenomenon globally and particularly for Armenia. This study finds that the monthly income gains for seasonal migrants from Armenia to Russia are about US$480 relative to only US$50 in the case of non‐migration. Individual panel data based on a novel household survey allow controlling for a variety of socio‐economic characteristics. Propensity score matching combined with difference‐in‐differences addresses potential endogenous self‐selection into migration. This paper finds negative selection based on education, employment, and pre‐migration income. This is reflected by a low premium for skills in Russia relative to Armenia, luring seasonal migrants into low‐skill jobs, mainly in the construction sector. The results identify seasonal labor migration as an attractive opportunity to escape unemployment, especially for the unskilled labor force. Therefore, seasonal migration has become an increasingly important source of income for households (through remittances) from low‐income countries and helps eradicate poverty.     

Are low-skill public sector workers really overpaid? A quasi-differenced panel data analysis

Public–private sectoral wage differentials have been studied extensively using quantile regression techniques. These typically find large public sector premiums at the bottom of the wage distribution. This may imply that low skill workers are ‘overpaid’, prompting concerns over efficiency. We note several other potential explanations for this result and explicitly test whether the premium varies with skill, using Australian data. We use a quasi-differenced Generalized Method of Moments (GMM) panel data model which has not been previously applied to this topic, internationally. Unlike other available methods, this technique identifies sectoral differences in returns to unobserved skill. It also facilitates a decomposition of the wage gap into components explained by differences in returns to all (observed and unobserved) skills and by differences in their stock. We find no evidence to suggest that the premium varies with skill. One interpretation is that the compressed wage profile of the public sector induces the best workers (on unobserved skills) to join the public sector in low wage occupations, vice versa in high wage occupations. We also estimate the average public sector premium to be 6% for women and statistically insignificant (4%) for men.     

On the Terms of Trade and Sectoral Reallocations

A commonly held view is that a small open economy adjusts to a negative external shock by switching both expenditure and resources toward the domestic traded goods sector. We show that, when both labor and imported inputs are used as factors of production, the average labor intensity in the nontraded sector may increase substantially with a decline in the terms of trade. This can lead to an internal transfer of labor into the nontraded sector, and an improvement in the trade balance even with a decline in traded sector output. This result depends on a combination of a high elasticity of substitution across nontraded varieties and large differences in labor intensities in the production of nontraded varieties. Our analysis suggests that intersectoral labor flows are not necessarily a good measure of an economy's flexibility, and that intersectoral resource reallocation and expenditure‐switching can move in opposite directions.     

Taxes and female labor supply

The Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986 changed the U.S. income tax structure in a dramatic fashion. In particular, these two reforms reduced the marginal tax rates for married households. In this paper I investigate what part of the rise in labor force participation of married women between 1980 to 1990 (a rise of 13 percentage points) can be accounted by the changes in taxes. I build an heterogeneous agent model populated by married households. Households differ by age and educational attainment levels of their members and decide whether the second earner, the wife, should participate in the labor market. I select parameter values so that the model economy is consistent with the 1980 U.S. economy in terms of income tax structure, wages (skill premium and gender gap), marital sorting (who is married with whom), and female labor force participation. Using counterfactual experiments I find that 20–24 percent of the rise in married female labor force participation is accounted for by the changes in the income tax structure. Changes in wages account for 62–64 percent, and changes in marital sorting account for 14–16 percent of the rise in the participation rate of married women.     

产业内贸易对中国技能 工资差距的影响

本文试图考察产业内贸易对技能工资差距的影响,理论分析表明：它随劳动力条件的变化而变化,在劳动力无限供给条件下它取决于技术劳动力的绝对需求,由于产业内贸易必能刺激技术劳动力的绝对需求,因此必然会扩大工资差距。但在劳动力条件转向有限供给后,它又取决于技术劳动力的相对需求,而产业内贸易未必使之扩大,特别是对两类劳动力替代弹性较大的部门来说,可能会使技术劳动力的相对需求下降,并使技能工资差距收缩。本文基于中国33个产业的5年面板数据验证了上述假说。     

Capital-skill complementarity and biased technical change across US sectors

The goal of this paper is two-fold. First, we reexamine the evidence for the capital-skill complementarity (CSC) and the skill-biased technological change (SBTC) hypotheses at the sectoral level in the US economy for the period 1970–2005. Second, we quantify their effect on the evolution of the wage skill premium. To do so, we estimate a translog model with three production factors (skilled labor, unskilled labor, and capital) for different sets of industry aggregates suggested by the literature. At the aggregated level, we find that both CSC and SBTC explain a substantial part of the observed change in the skill premium. The CSC hypothesis also receives support across sectors, although SBTC often explains a larger part of the premium change. We also find that the relevance of CSC increases with the level of aggregation of the data. Besides, when we disaggregate capital into ICT and non-ICT, our results suggest that often ICT capital is not the primary source of CSC. However, ICT-CSC is the most important driver of the skill premium in specific sectors, such as financial and business services.     

Immigration-induced effects of changes in size and skill distribution of the labor force on wages in the U.S.

We isolate the effect of immigration-induced changes in the size and skill distribution of the labor force on labor market outcomes using a model in which firms endogenously respond to these changes. We analytically show that while the immigration-induced increase in the size increases the relative wages, employment and output shares of the skill intensive sector, changes in the skill distribution lead to analytically ambiguous effects. We derive quantitative results for the US economy under different counter-factual scenarios with respect to immigration-induced changes in size and skill distribution of the labor force, where these changes resemble those of U.S. as a whole, New York, California and Canada, and reflect different immigration policy regimes. For example, immigration increases the mass of workers at the lower range of the skill distribution in the U.S., and the upper range in Canada. Regardless of these differences across scenarios, our quantitative results indicate that immigration increases the relative average wages of the skill intensive sector. Further, real wages of all workers increase due to reduced prices caused by the increased size of the labor force.     

Technology and labor regulations: theory and evidence

This paper shows that different labor market policies can lead to differences in technology across sectors in a model of labor saving technologies. Labor market regulations reduce the skill premium and as a result, if technologies are labor saving, countries with more stringent labor regulation, which bind more for low skilled workers, become less technologically advanced in their high skill sectors, but more technologically advanced in their low skill sectors. We then present data on capital-output ratios, on estimated productivity levels and on patent creation, which tend to support the predictions of our model.