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Trade liberalization, technology, relative factor supplies and the relative wage: evidence from the South

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  • Tahir Abdi

Abstract

There is much controversy about the role that trade liberalization, technological change and relative factor supplies have played in bringing about changes in the relative wage of the unskilled workers. Much of the empirical work on this issue has focused on the industrial countries and paid little attention to developing countries. To fill this gap, this study develops a special data set to examine the relative wage behaviour of a large number of developing countries. An empirical model based on the theory is used to test different explanations of the relative wage change. As predicted by the technology explanation, the empirical analysis in the study finds a significant negative link between the relative wage of unskilled workers and the technology index. The analysis, however, does not find a significant role for labour supplies or trade liberalization in determining the relative wage of unskilled-skilled workers.

Suggested Citation

  • Tahir Abdi, 2007. "Trade liberalization, technology, relative factor supplies and the relative wage: evidence from the South," Applied Economics, Taylor & Francis Journals, vol. 39(19), pages 2451-2463.
    • Handle: RePEc:taf:applec:v:39:y:2007:i:19:p:2451-2463
    DOI: 10.1080/00036840600567660
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    References listed on IDEAS

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    1. Mr. Phillip L Swagel & Mr. Matthew J. Slaughter, 1997. "The Effect of Globalization on Wages in the Advanced Economies," IMF Working Papers 1997/043, International Monetary Fund.
    2. Robbins, Donald J., 1996. "Hos Hits Facts: Facts Win Evidence On Trade And Wages In The Developing World," Harvard Institute for International Development (HIID) Papers 294374, Harvard University, Kennedy School of Government.
    3. Edward E. Leamer, 1994. "Trade, Wages and Revolving Door Ideas," NBER Working Papers 4716, National Bureau of Economic Research, Inc.
    4. Donald J. Robbins, 1996. "Evidence on Trade and Wages in the Developing World," OECD Development Centre Working Papers 119, OECD Publishing.
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    Cited by:

    1. Gouranga Das, 2009. "A hybrid production structure in trade: theory and implications," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 56(4), pages 359-375, December.
    2. Choi, E. Kwan, 2011. "To integrate with a high- or low-wage country: That is the question," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 792-799, October.
    3. Mah, Jai S., 2013. "Globalization, decentralization and income inequality: The case of China," Economic Modelling, Elsevier, vol. 31(C), pages 653-658.

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