Trade,Technology and the Labour Market: The Case of South Africa*

This study advances previous work on the effects of trade and technological change on labour markets within the framework of Heckscher–Ohlin trade theory. We provide evidence for an unskilled labour abundant developing country by employing dynamic heterogeneous panel estimation techniques. For South African manufacturing, trade‐mandated increases in earnings are positive for labour and negative for capital whilst technology‐mandated increases are negative for both factors. We also find it important to take account of endogeneity issues in analysing the impact of technology and price changes on factor returns and in isolating factor‐ and sector‐bias of technological changes.