Does fast Growth in India and China harm U.S. Workers? Insights from Simulation Evidence
AbstractA major political and policy issue today is whether globalisation and rapid economic growth in India and China would have an adverse affect on labour markets in the U.S. and other advanced countries. Some leading economists have argued that even though the recent integration of India and China with the liberalised global economy has not so far had a serious negative impact on wages and employment in advanced countries, it is most likely to do so in the future in view of the growing technological and scientific capabilities in the two developing countries. This is also because it is suggested that this integration represents a sudden doubling of the world labour force without a concomitant increase in capital. The present paper argues against this plausible thesis, essentially on two grounds: (a) it does not take into account the demand side effects of fast growth in India and China; and (b) it abstracts from the dynamism of the U.S. real economy and its innovative large corporations. However, simulations of different scenarios on the CAM world econometric model indicate that at a disaggregated level there are severe supply side constraints on energy, raw materials and food which thwart the expansionary demand side effects of fast growth in India and China.
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Bibliographic InfoPaper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp378.
Date of creation: Dec 2008
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Globalisation; China and India; Simulation; U.S. Workers; Economic integration;
Find related papers by JEL classification:
- J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- F01 - International Economics - - General - - - Global Outlook
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-14 (All new papers)
- NEP-CMP-2009-03-14 (Computational Economics)
- NEP-CNA-2009-03-14 (China)
- NEP-CWA-2009-03-14 (Central & Western Asia)
- NEP-DEV-2009-03-14 (Development)
- NEP-FDG-2009-03-14 (Financial Development & Growth)
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