Trade Liberalization,Skill‐linked Intermediate Production and the Two‐sided Wage Gap

Abstract

A rising wage‐gap, almost universally, in the last two decades has contradicted the age‐old conventional wisdom of asymmetric wage movements across nations when trade is liberalized. We offer an explanation that fits well with the emerging trade pattern between the developed and more advanced developing countries like India and Mexico. We argue that a tariff reduction in the South on imports of an intermediate good from the North may raise the wage‐gap in both the North and the South. The price of the intermediate good moving in different directions and different factor‐intensity‐ranking of this good relative to the two different final goods produced in the two countries underlie this result. Rising wage inequality may specially affect the South because educational expenses and infrastructure do not allow ready transformation of the vast masses of unskilled workers into skilled workers. Hence, the policy lesson of the paper seems to be more public effort in arranging for smoother acquisition of human capital by the unskilled.     

技能型技术进步、南北贸易与工资不平衡

本文试图将技能型技术进步与产业内贸易置于一个框架中对工资不平衡现象进行理论解释。自由贸易通过促使发达国家产品质量阶梯提升型的技术进步而加剧了该国的工资不平衡程度;同时,自由贸易通过促使发展中国家产品种类数增加型的技术进步而加剧了该国的工资不平衡程度。南北贸易在拉大相对工资差距的同时促进了技能型技术进步。     

Informal Employment and the Structure of Wages in India: A Review of Trends

The “alternative”, “atypical” or “informal” workforce has grown in developed and developing countries alike. One of the more recent evolutions of informal employment has been of informal employment within formal enterprises. In the interest of flexibility and cost‐reduction, many formal firms increasingly resort to hiring workers on a temporary or informal basis. Alongside, and perhaps, as a result of the persistence and pervasiveness of informal employment, issues relating to inequality have come to the fore. This paper is motivated by these two intertwining aspects of Indian labor market—informality and wage inequality. Using nationally representative sample data, the paper examines trends in wage inequality among various forms of informal workers, overlaying these findings with broader trends in inequality. Using a regression based inequality decomposition, the paper compares the sources of wage inequality across different employment groups and the reasons for differences in wage inequality.     

Tracing the impact of large minimum wage changes on household welfare in Indonesia

Minimum wage legislation has been introduced and expanded in many developed and developing countries, in the hope that it would improve the living standards of the poor and reduce inequality. This study examines the impact of large minimum wage changes in Indonesia. The results indicate serious limitations of the minimum wage for improving living standards and reducing inequality.     

Assessing the distributive effects of minimum wage

This paper analyzes the role of Uruguay's sharp minimum wage increases after 2004 amidst the country's slight wage inequality decrease. We found that the minimum wage increase has contributed to the reduction of wage inequality for formal workers mainly. However, we also found a negative impact on employment outside the capital city, Montevideo, and observed a reduction in working hours. These results raise doubts about the effectiveness of minimum wage as a redistribution instrument in developing countries.     

Wage inequality in Turkey, 2002–10

This paper studies the evolution of wage inequality in Turkey using household labour force survey data from 2002 to 2010. Between 2002 and 2004, the relative supply of more‐educated workers to less‐educated workers remained constant while their relative wages decreased in favour of less‐educated workers. However, between 2004 and 2010, the relative supply of more‐educated workers to less‐educated workers rose, while their relative wages remained constant or kept increasing in favour of more‐educated workers. This suggests factors other than those implied by a simple supply‐demand model are involved, such as skill‐biased technical change or minimum wage variations. The decomposition of wage inequality reveals that the price (wage) effect dominates the composition effect particularly in the first period. Our results show that the real minimum wage hike in 2004 corresponds to a major institutional change, which proved to be welfare‐increasing in terms of wage inequality. The upper‐tail (90/50) wage inequality decreased between 2002 and 2004 and stayed constant thereafter, whereas the lower‐tail (50/10) wage inequality decreased throughout the period. Our findings thus provide evidence supporting the institutional argument for explaining wage inequality.     

基于多目标规划的寿险公司资产负债管理

资产负债管理是保险公司管理的核心内容之一,其所要实现的目标很多,其中某些目标之间是具有矛盾性的。本文针对寿险公司资产负债管理存在的众多冲突目标问题,建立了一个多目标资产负债管理模型,以帮助寿险公司实现资产配置和负债配置的风险最小化目标、利润最大化目标和公司价值最大化目标。算例分析发现,基于多目标规划的资产负债管理模型能够同时实现不同的目标,改善寿险公司的管理效果,而且该模型具有稳定性。     

A Reexamination of the Time Path of Wage Differentials in Taiwan

Contrary to the conclusions of a recent paper by Chen and Hsu (Review of Development Economics, vol. 5, 2001, pp. 336–54), wage inequality and returns to college‐educated workers have risen in Taiwan since 1980. Government policies which have caused rapid expansion of the supply of new college graduates have depressed returns for only the youngest cohorts of college graduates. Older cohorts of college graduates experienced rising returns, as have college graduates as a whole. Young college‐educated women's returns fell more and older college‐educated women's returns rose more relative to their male counterparts. Consequently, the rising share of women in the labor force helped amplify these trends. Changing trade patterns have tended to increase labor demand in sectors that use educated labor more intensively, helping to raise returns to skill. However, in contrast to western economies, rising capital intensity does not appear to have accelerated the pay gap by skill in Taiwan.     

Wage inequality in developing countries: South–South trade matters

The relationship between trade liberalization and inequality has received considerable attention in recent years. The major purpose of this study is to present new results on the sources of wage inequalities in manufacturing taking into account South–South (S–S) trade. Globalization has not only lead to increasing North–South (N–S) trade, but it has also changed the direction and composition of trade as more trade is carried out among developing countries. In this study, we find that increasing wage inequality is associated more with the South–South trade liberalization than with the classical trade liberalization with northern countries. A part of this increasing wage inequality due to S–S trade comes from the development of N–S trade relationship in S–S trade that increases wage inequality in middle-income developing countries. This study also seeks to shed some light on the link between the direction of trade and technological change. We explore the fact that S–S trade leads to a technological change biased toward skill-intensive sectors more than N–S trade. This indirect effect increases wage inequality for all developing countries, but it is more important in low-income 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.     

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.     

The contribution of minimum wage valorization policy to the decline in household income inequality in Brazil: A decomposition approach

There is a vast literature that estimates the effect of the minimum wage on wage inequality in various countries. However, as the minimum wage directly affects nonlabor income of families in some countries (in the Brazilian case via the benefits of the pension system and of certain social programs), this article extends the empirical analysis by studying the effects of the minimum wage on the level of inequality of household income as a whole. To accomplish that we employ a decomposition method that gauges the contribution of the increases in the minimum wage that occurred in recent decades in Brazil through the labor and nonlabor sources of household income. The results show that the minimum wage had a contribution of 64 percent to the observed fall in income inequality between 1995 and 2014 and that pensions were the most relevant channel over this period.     

Skill‐biased heterogeneous firms,trade liberalization and the skill premium

We propose a theory that rising globalization and rising wage inequality are related because trade liberalization raises the demand facing highly competitive skill‐intensive firms. In our model, only the lowest‐cost firms participate in the global economy exactly along the lines of Melitz ( 2003 ). In addition to differing in their productivity, firms differ in their skill intensity. We model skill‐biased technology as a correlation between skill intensity and technological acumen, and we estimate this correlation to be large using firm‐level data from Chile in 1995. A fall in trade costs leads to both greater trade volumes and an increase in the relative demand for skill, as the lowest‐cost/most‐skilled firms expand to serve the export market while less skill‐intensive non‐exporters retrench in the face of increased import competition. This mechanism works regardless of factor endowment differences, so we provide an explanation for why globalization and wage inequality move together in both skill‐abundant and skill‐scarce countries. In our model countries are net exporters of the services of their abundant factor, but there are no Stolper‐Samuelson effects because import competition affects all domestic firms equally.     

Wage Inequality and Returns to Education in Turkey: A Quantile Regression Analysis

This paper investigates the male wage inequality and its evolution over the 1994–2002 period in Turkey by estimating Mincerian wage equations using ordinary least squares and quantile regression techniques. Male wage inequality is high in Turkey. While it declined at the lower end of the wage distribution it increased at the top end of wage distribution. Education contributed to higher wage inequality through both within and between dimensions. The within‐groups inequality increased and between‐groups inequality decreased over the study period. The latter factor may have dominated the former contributing to the observed decline in the male wage inequality over the 1994–2002. Further results are provided for the wage effects of experience, public sector employment, geographic location, firm size, industry of employment and their contribution to wage inequality. Recent increases in foreign direct investiment inflows, openness to trade and global technological developments are discussed as contributing factors to the recent rising within‐groups wage inequality.     

Meeting the Social Policy Challenges Facing Korea

Korea faces the fastest population aging among Organisation for Economic Cooperation and Development countries and increasing levels of income inequality and relative poverty. While economic growth will help address these challenges, growth alone is not sufficient, making it necessary to introduce policies to promote social cohesion. First, the National Pension Scheme and the National Health Insurance need to be improved. Second, Korea should develop well‐targeted social programs and expand the earned income tax credit. Third, it is important to reduce labor market dualism, a major cause of inequality due to the large wage gap between regular and non‐regular workers. Fourth, education reform is needed to lower the financial burden of tertiary education, reduce the heavy reliance on hagwon and increase spending on preprimary education. At the same time, it is essential to maintain a sound fiscal position by increasing tax revenues, primarily through indirect taxes and environmental taxes, to cover rising social spending.     

Does Outsourcing Provision Lead to Wage Inequality? New Evidence from Thailand's Establishment‐level Data

The impacts of outsourcing provision—the arrangements whereby a firm carries out production stages for other firms—are examined on wage differentials between skilled and unskilled workers using Thailand's establishment‐level data. The estimates based on a translog production function indicate that outsourcing provision augments productivity of both skilled and unskilled labor and contributes positively to wage inequality. The model predicts that a 1% increase in outsourcing provision leads to a rise in wage differentials by nearly 2.5%. The robustness check further reveals that the impacts of services provision on wage inequality are more pronounced than those of materials provision. These results highlight the importance of outsourcing provision as a new explanation of the widening skilled–unskilled wage gap in developing countries which typically emerge as a hub of outsourcing provision.     

Economic liberalization and wage inequality in the presence of labour market imperfection

This paper is purported to analyze the consequences of liberalized economic policies on the skilled–unskilled wage inequality in the developing countries using a three sector general equilibrium model reasonable for at least a few developing economies. The analysis of the paper has found that the wage inequality rises unambiguously due to a reduction of import tariff from the low-skill manufacturing sector. However, an inflow of foreign capital produces a favourable effect on the wage inequality under a reasonable factor intensity condition. Interestingly, contrary to the common wisdom, a policy of labour market reform may raise the competitive unskilled wage and improve wage inequality under reasonable condition.     

Another Nail in the Coffin? Or Can the Trade Based Explanation of Changing Skill Structures Be Resurrected?

The skill structure of wages and employment has altered markedly in recent years. In some countries (most notably the UK and the US) wage inequality has risen sharply and in most countries relative demand has shifted unfavourably against the less skilled. In this paper we reassess the evidence that rising international competition from developing countries is the crucial factor underpinning these changes. Our results, based on newly constructed internationally comparable industry data, find little support for the predictions of the basic Heckscher-Ohlin (H-O) trade model.
JEL classification: J 31; F 14     

我国最低工资的制度逻辑——一个政治经济学的解读框架

最低工资制度从诞生时起就备受争议.主流经济学家反对的主要理由是,最低工资是对劳动力市场的价格管制,会导致失业率上升,经济效率下降.尽管这一结论并未完全得到实证检验的支持,但是作为一个正在崛起的发展中大国,效率和就业自然是我们首要关注的.理论和现实说明,我国目前并不具备最低工资的实施环境,那么政府为什么还要推行最低工资制度呢?本文提供了一个政治经济学的解读框架.     

HOW DO MINIMUM WAGE ADJUSTMENTS AFFECT WAGES IN CHINA: EVIDENCE BASED ON ADMINISTRATIVE PERSONAL INCOME TAX DATA

By using unique administrative personal income tax data covering the population of a middle‐sized Chinese city from 2009 to 2013, we explore how minimum wage adjustments affect wages of low‐wage workers. The empirical evidence documented in this paper suggests a unique pattern of minimum wage regulation: while it permits wages to stay below the prevailing minimum wage threshold temporarily, it does encourage a higher growth rate for wages below the threshold. Overall, such a pattern might help lessen any downward pressures on employment, while ensuring that low‐wage earners gradually get better off over time. (JEL J3, J6, P5)