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Trade, Technical Change, and Labour Market Adjustment

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  • Bernhard Heitger
  • J¸rgen Stehn
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    Abstract

    This paper empirically examines three possible reasons for the high and rising unemployment of low-skilled employees in Germany: (i) an upsurge in inter-industry trade, (ii) a skill-biased technical change, and (iii) a failure of labour market adjustment. The empirical analyses indicate that an exogenous wage-setting process as well as a bundle of factors, including a skill-biased technical and structural change, have contributed to the decline in relative demand for low-skilled employees in Germany. Thus, economic policy in Germany should focus on improving the employability of workers in the lower segment of the labour market and on raising the adjustment flexibility, above all the flexibility of the wage structure, of the German labour market. Copyright Blackwell Publishing Ltd 2003.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal The World Economy.

    Volume (Year): 26 (2003)
    Issue (Month): 10 (November)
    Pages: 1481-1502

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    Handle: RePEc:bla:worlde:v:26:y:2003:i:10:p:1481-1502

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    Cited by:
    1. Harald Hagemann & Ralf Rukwid, 2007. "Perspectives of Workers with Low Qualifications in Germany under the Pressures of Globalization and Technical Progress," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 291/2007, Department of Economics, University of Hohenheim, Germany.
    2. Francesco Serti & Chiara Tomasi & Antonello Zanfei, 2007. "Exporters, Importers and Two-way Traders: the Links between Internationalization, Skills and Wages," Working Papers 0713, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.

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