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A Theory of Defensive Skill-Biased Innovation and Globalization

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Author Info
Mathias Thoenig
Thierry Verdier

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Abstract

This paper considers a dynamic model of innovations in which firms can endogenously bias the direction of technological change. Both in a North-North and North-South context, we show that, when globalization triggers an increased threat of technological leapfrogging or imitation, firms tend to respond to that threat by biasing the direction of their innovations towards skilled-labor intensive technologies. We show that this process of defensive skill-biased innovations generates an increase in wage inequalities in both regions. We then discuss suggestive empirical evidence of the existence of defensive skill-biased technical change.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 93 (2003)
Issue (Month): 3 (June)
Pages: 709-728
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Handle: RePEc:aea:aecrev:v:93:y:2003:i:3:p:709-728

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ekholm, Karolina & Ulltveit-Moe, Karen-Helene, 2001. "Relative Wages and Trade-Induced Changes in Technology," CEPR Discussion Papers 2677, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Thoenig, Mathias & Verdier, Thierry, 2000. "Trade Induced Technical Bias And Wage Inequalities: A Theory Of Defensive Innovations," CEPR Discussion Papers 2401, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Maurin, Eric & Thesmar, David & Thoenig, Mathias, 2002. "Globalization and the demand for skill: An Export Based Channel," CEPR Discussion Papers 3406, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Freeman, Richard B., 1987. "Demand for education," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 6, pages 357-386 Elsevier. [Downloadable!] (restricted)
  5. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, vol. 84(2), pages 10-16, May. [Downloadable!] (restricted)
  6. Amsden, Alice H, 1983. "'De-Skilling,' Skilled Commodities, and the NICs' Emerging Competitive Advantage," American Economic Review, American Economic Association, vol. 73(2), pages 333-37, May. [Downloadable!] (restricted)
  7. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August. [Downloadable!] (restricted)
  8. Edward E. Leamer, 1994. "Trade, Wages and Revolving Door Ideas," NBER Working Papers 4716, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  9. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Williams, J.R., 1992. "How Sustainable is your Competitive Advantage?," GSIA Working Papers 1992-03, Carnegie Mellon University, Tepper School of Business.
  11. Nelson, Richard R. & Winter, Sidney G., 1977. "In search of useful theory of innovation," Research Policy, Elsevier, vol. 6(1), pages 36-76, January. [Downloadable!] (restricted)
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  12. Krugman, Paul R., 2000. "Technology, trade and factor prices," Journal of International Economics, Elsevier, vol. 50(1), pages 51-71, February. [Downloadable!] (restricted)
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  13. Elias Dinopoulos & Paul Segerstrom, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June. [Downloadable!] (restricted)
  14. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Epifani, Paolo & Gancia, Gino, 2002. "The Skill Bias of World Trade," Seminar Papers 707, Stockholm University, Institute for International Economic Studies. [Downloadable!]
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  16. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1994-1), pages 1-84. [Downloadable!]
  17. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change And Wage Inequality," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1055-1089, November. [Downloadable!] (restricted)
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  18. Markusen, James R. & Venables, Anthony J., 1998. "Multinational firms and the new trade theory," Journal of International Economics, Elsevier, vol. 46(2), pages 183-203, December. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Lundin, Nannan & Sjöholm, Fredrik & Ping, He & Qian, Jinchang, 2007. "Technology Development and Job Creation in China," Working Paper Series 697, Research Institute of Industrial Economics. [Downloadable!]
  2. J. Paul Dunne & Lawrence Edwards, 2006. "Trade Technology and Employment: A case Study of South Africa," Discussion Papers 0602, University of the West of England, School of Economics. [Downloadable!]
  3. Menezes Filho, N. A. & Giovannetti, Bruno, 2006. "Trade Liberalization and Demand for Skill in Brazil," Ibmec Working Papers wpe_55, Ibmec Working Paper, Ibmec São Paulo. [Downloadable!]
  4. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Salvador Balle & Amedeo Spadaro, 2006. "Optimal Nonlinear Labor Income Taxation in Dynamic Economies," Working Papers 19, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
    Other versions:
  6. Daron Acemoglu, 2005. "Equilibrium Bias of Technology," NBER Working Papers 11845, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Jagadeesh Sivadasan & Joel Slemrod, 2006. "Tax Law Changes, Income Shifting and Measured Wage Inequality: Evidence from India," NBER Working Papers 12240, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. J.Peter Neary, 2003. "Globalisation and Market Structure," DNB Staff Reports (discontinued) 100, Netherlands Central Bank. [Downloadable!]
  9. Daniel Fernandez Kranz, 2006. "Why has wage inequality increased more in the USA than in Europe? An empirical investigation of the demand and supply of skill," Applied Economics, Taylor and Francis Journals, vol. 38(7), pages 771-788, April. [Downloadable!] (restricted)
  10. Ferreira, Francisco H. G. & Leite, Phillippe G. & Wai-Poi, Matthew, 2007. "Trade liberalization, employment flows, and wage inequality in Brazil," Policy Research Working Paper Series 4108, The World Bank. [Downloadable!]
  11. Kiminori Matsuyama, 2004. "Beyond Icebergs: Modeling Globalization as Biased Technical Change," CIRJE F-Series CIRJE-F-295, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
    Other versions:
  12. Paolo Epifani & Gino Gancia, 2002. "The Skill Bias of World Trade," CESPRI Working Papers 129, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Mar 2001. [Downloadable!]
    Other versions:
  13. Winfried Koeniger, 2007. "Openness, Wage Floors and Technology Change," Contributions to Macroeconomics, Berkeley Electronic Press, vol. 7(1), pages 1373-1373. [Downloadable!] (restricted)
  14. GUSTAVO GONZAGA & Naércio Menezes Filho & Maria Cristina Trindade Terra, 2005. "Trade Liberalization and the Evolution of Skill Earnings Differentials in Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 585, Graduate School of Economics, Getulio Vargas Foundation (Brazil). [Downloadable!]
    Other versions:
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