Looking back, looking ahead: Biased technological change, substitution and the wage gap

The implications of ICT on wage inequality are studied by applying a CES production function with skilled and unskilled labour. Skill-biased technological change increases wage inequality. The result is reinforced in a two-sector general equilibrium model if the income elasticity of the demand for high-tech goods and the elasticity of substitution between final goods are larger than one.     

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.     

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.     

Quantifying the Impact of Trade on Wages: the Role of Nontraded Goods

This paper uses an applied general‐equilbrium model to decompose the effects of changes in trade‐ and technology‐related variables between 1982 and 1996 in the United States on the wages of skilled and unskilled labor. The results indicate that trade‐related variables (tariff cuts, improvement in the terms of trade, and the increase in the trade deficit) had little impact on the widening wage gap. The major factor behind the rise in the skilled wage relative to the unskilled wage was differential rates of growth in skill‐biased technical change across sectors. The paper also highlights the role that nontraded goods play in explaining the wage gap. Finally, the paper presents estimates of how wages would change if the economy moved to autarky. The results show that expanding trade could actually reduce wage inequality, rather than increase it.     

Decomposing the effect of trade on the gender wage gap

This paper uses variation in exposure to increased Chinese imports in Brazil to investigate the impact of trade on gender wage inequality. First, using Brazilian census data, we find that rising imports reduced the gender wage gap in Brazilian local labour markets. Next, using Oaxaca–Blinder decompositions, we show that this reduction in the wage gap was largely explained by trade increasing the share of female workers in higher-paying occupations. Finally, we use a matched employer–employee data set to investigate how individual workers adjust to the trade shock. Similar to the local labour market analysis, we find that male workers exposed to increased import competition saw a larger decline in both wages and cumulative earnings relative to female workers. In addition, we uncover an interesting asymmetry in that, while male workers exhibited much higher degrees of industry mobility in response to the trade shock, female workers exhibited an equal if not higher degree of occupational mobility.     

Within‐firm wage inequality and firm‐level exports

This paper analyzes changes in within‐firm inequality of hourly wages arising from export shocks to exporting firms in Denmark. We provide causal evidence that export demand shocks increase within‐firm inequality. Decomposing overall inequality into within and between components for occupational and educational groups, the results show that exports lead to a significant increase in within‐group wage inequality but do not affect the between‐group component. We develop a partial equilibrium model, featuring heterogeneous workers, which rationalizes these observations and shows how export demand shocks induce a complementarity effect, leading to increases in wage inequality within firms.     

Monopoly,intermediate goods and the pure theory of international trade

Conclusion In a model with two traded good sectors between which intersectoral flows of intermediate goods are allowed and with a monopolized non-traded good sector, the wage rate in terms of two traded goods increases and the rental of capital in terms of two traded goods decreases when the price of relatively more labor intensive traded good sector increases, though nothing definite can be said about the direction of change in the wage rate and rental in terms of the non-traded good. When prices of traded goods are kept constant and labor and/or capital increase(s), output of the non-traded good sector increases provided that the non-traded good is not inferior, having income elasticity of demand less than unity. The factor intensity condition for the traded goods is in general not sufficient for the validity of the Rybczynski theorem to hold with respect to net outputs of the traded goods. We have derived sufficient conditions for the magnification effect to be observed with respect to net outputs of the traded good sectors. Specifically, we have shown that the factor intensity condition (23) is sufficient for the magnification effect to prevail when only labor increases.     

贸易自由化、有偏的学习效应与发展中国家的工资差异

本文构建了一个模型来研究贸易自由化对熟练劳动力与非熟练劳动力工资差异的影响,从而解释发展中国家工资差异之谜。在贸易自由化之后,发展中国家接触和学习到相对多的与熟练劳动力匹配的技术知识,因此,和生产与非熟练劳动力匹配的技术知识相比,生产与熟练劳动力匹配的技术知识的生产力水平上升相对较多。也就是说,学习效应是有偏的。因为技术知识的生产是熟练劳动力密集型的,所以学习效应会导致对熟练劳动力需求的增加,扩大工资差异。同时,有偏的学习效应会使技术进步更偏向于技能密集型,从而进一步导致对熟练劳动力需求的增加,扩大工资差异。     

Shocks and rigidities as determinants of CEE labour markets’ performance

In this article, the impact of real wage, productivity, labour demand and supply shocks on eight Central and Eastern European (CEE) economies from 1996–2007 is analysed with a panel structural vector error correction model. A set of long‐run restrictions derived from the dynamic stochastic general equilibrium (DSGE) model is used to identify structural shocks, and fluctuations in foreign demand are controlled for. We find that the propagation of shocks on CEE labour markets resembles that found for OECD countries. Labour demand shocks emerge as the main determinant of employment and unemployment variability in the short‐to‐medium run, but wage rigidities were equally important for observed labour market performance, especially in Poland, Czech Republic and Lithuania. We associate these rigidities with collective bargaining, minimum wage, active labour market policies and employment protection legislation.     

Cointegration and common trends on the West German labour market

In this paper we analyze the West German labour market by means of a cointegrated structural VAR model. We find sensible stable long-run relationships that are interpreted as a labour demand, a wage setting and a goods market equilibrium. In order to study the dynamic behaviour of the model we identify two common trends that push unemployment. We find that goods market shocks have only transitory impacts on unemployment. In the long run, it is almost equally determined by technology and labour supply factors. However, transitory shocks have major importance in the shorter run since adjustment processes are rather sluggish. First version received: Sept. 1998/Final version accepted: Feb. 2000     

Wage bargaining,trade and growth

We construct a North-South product-cycle model of trade with fully-endogenous growth and union wage bargaining. Economic growth is driven by Northern entrepreneurs who conduct R&D to innovate higher quality products. Northern production technologies can leak to the South upon successful imitation. The North has two sectors: a tradable industrial goods sector (manufacturing) where wages are determined via a bargaining process and a non-tradable sector (services) where wages are flexible. The South has only a tradable industrial goods sector where wages are flexible.We find that unilateral Northern trade liberalization, in the form of lower Northern tariffs on industrial goods, increases the rate of innovation but decreases both the bargained wage in the industrial sector and the flexible wage in the service sector. The wage effects are relative to the Southern wage rate. We also consider a variant of the model with Northern unemployment, driven by a binding minimum wage in the non-tradable service sector. In this case, Northern tariff cuts decrease the innovation rate and the bargained wage rate. In addition, the Northern unemployment rate increases. The model thus highlights the role of labor market institutions in determining the growth and labor market effects of tariff reductions. We also study the effects of unilateral Southern trade liberalization.     

Market entry and trade weighted import costs

Trade weighting is a common method of aggregating trade frictions. It will understate changes in these costs when there are non‐ad valorem trade costs and quality differences. Newly traded goods enter at higher trade costs than previously traded ones. Lower import costs shift trade to low‐quality goods with higher measured trade costs. These effects are quantitatively important. U.S. import costs fall more than twice as fast as trade weighted measures from 1974 to 2004 after the impact of shifting quality and newly traded goods is accounted for. Empirical estimates that use trade weighting will underestimate the welfare impact of trade costs.     

Indra-Industry Trade,Endogenous Technical Change,Wage Inequality and Welfare

By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models consider the existence of intersectoral linkages), I show by means of Applied General Equilibrium (AGE) analysis that trade rises wage inequality between skilled and unskilled workers; but the impact on wage inequality is far larger, when countries are assumed to exchange differentiated capital goods. The latter result has been obtained by using an imperfect competitive model, which embodies a sector bias technological change that arises from trade. In addition, the gains from trade, insignificant under the standard trade hypotheses, are extraordinarily large when endogenous technological change is taken into account. The main policy conclusion is that if policy makers of flexible wage economies introduce trade barriers to reduce wage inequality, these protective measures, by affecting the diffusion of technology, would cause a large welfare loss. [D58, f12, F43, J3, O3]     

技能偏向型技术进步必然加剧工资不平等吗?

劳动经济学界在20世纪90年代形成了共识:美国等OECD国家从70年代末到90年代末的教育升水(不同教育水平工人的工资差距)持续上升是由技能偏向型技术进步导致的。但90年代共识无法解释第二次世界大战后美国在技能偏向型技术进步下教育升水并非总是上升的事实。此外其理论基础在于技能偏向型技术进步下抑制低技能劳动力需求的腐蚀效应和提升高技能劳动力需求的市场规模效应会加剧工资不平等。本文指出其理论基础的缺陷,并将教育效率和劳动力市场的技能供求关系整合在一个技能偏向型技术进步与工资不平等都处于内生演化的动态模型中。本文证明技术进步率的提升在短期会提升工资不平等,但当教育系统的效率处于一定的区间时,技能偏向型技术进步在长期会降低工资不平等。因此,本文的研究挑战了90年代共识的悲观论点,并丰富了有关技能偏好型技术进步对于工资不平等影响的研究。     

Learning,experience and the dynamics of north–south Trade and technology transfer

This paper examines the dynamics of learning and experience that underlie technology transfer using a North-South trade model with a continuum of goods. Since North is historically more experienced than South, it initially produces the most advanced goods and pays higher wages. Whenever there is a market-driven transfer of technology and production over time, there will be some wage convergence as South gradually gains experience. Nevertheless, wage inequality must persist in the steady state. Product innovation typically increases steady-state wage inequality because new goods are produced in North, and North ultimately learns than South. [F12, O19]     

Patterns of Skill Premia

This paper develops a model to analyse how skill premia differ over time and across countries, and uses this model to study the impact of international trade on wage inequality. Skill premia are determined by technology, the relative supply of skills, and trade. Technology is itself endogenous, and responds to profit incentives. An increase in the relative supply of skills, holding technology constant, reduces the skill premium. But an increase in the supply of skills over time also induces a change in technology, increasing the demand for skills. The most important result of the paper is that increased international trade induces skill-biased technical change. As a result, trade opening can cause a rise in inequality both in the U.S. and the less developed countries, and thanks to the induced skill-biased technical change, this can happen without a rise in the relative prices of skill-intensive goods in the U.S., which is the usual intervening mechanism in the standard trade models.     

Labour mobility and the redistributive effects of trade integration

This paper addresses the role of mobility costs in shaping the effects of trade integration on wage inequality and welfare. We present a three-factor, two-sector model in which the production technology exhibits capital-skill complementarity and the cost of moving across sectors differs between unskilled and skilled workers. Results show that trade integration increases aggregate welfare, but it also raises wage inequality, both within and across skill categories. We also model a public re-training program, financed by a proportional tax levied on skilled workers, which reduces the mobility cost of unskilled workers. We show that even if the re-training programme entails some welfare losses, it can reduce both within and between wage inequality, while still making free trade Pareto superior with respect to the no-trade regime.     

Innovation and international trade in technology

The international market for technology is growing rapidly relative to world GDP. To study the international technology market, I present a model of innovation and international trade in which inventors auction their technology in both domestic and foreign markets. There is monopolistic competition in differentiated products. International trade in technology has number of significant economic effects. Technology trade improves the quality of innovation by increasing the pool of R&D experiments from which the best technology is chosen. Technology trade increases the efficiency of invention while at the same time lowering the total number of inventors relative to the equilibrium without technology trade. Technology trade increases the volume of trade in goods. Technology trade increases product variety at the market equilibrium. Technology trade increases national income in each country and increases total gains from trade.     

International trade and domestic distortions

When full competition prevails in product, labor, and capital markets, positive or negative external trade shocks may be accommodated by the migration of jobs between sectors; the negative impact on some households?? income of lower nominal wages will be more than offset by lower prices of imported final goods. Unemployment, if any, will be temporary, unless labor market rigidities prevent the necessary adjustment. By contrast, we argue that trade shocks trigger a process of creative destruction that necessarily causes distortions in the structure of productive capacity and, hence, market disequilibria. Therefore, the structural change that follows trade shocks can no longer be analyzed within an equilibrium framework. The transition following a shock may be characterized by increasing imbalances, and create scope for policy intervention. The model presented in this paper, which focuses on the time dimension of production and market imbalances, allows us to clarify the debate.