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Victims of Progress: Economic Integration, Specialization, and Wages for Unskilled Labor

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Author Info
Joseph Francois () (Erasmus University Rotterdam, and CEPR)
Douglas R. Nelson (Murphy Institute of Political Economy)

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Abstract

In this paper we demonstrate that intra-industry trade (or FDI) between identical countries could produce the observed deterioration in the relative wages of unskilled workers. This involves a model of North-North integration through either increased trade flows or increased MNE- based production. Our motivation in this regard is arguments to the effect that trade cannot be responsible for the observed labour market trends because trade with developing countries is quantitatively too small to have significant labour market effects. We also introduce a relatively unexploited class of model that possesses attractive properties with respect to the explicit incorporation of firm-theoretic considerations in trade models.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 00-065/2.

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Date of creation: 31 Jul 2000
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Handle: RePEc:dgr:uvatin:20000065

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Related research
Keywords: trade and wages; trade and employment; FDI and wages; globalization and employment;

Other versions of this item:

Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F15 - International Economics - - Trade - - - Economic Integration
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
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    Other versions:
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Full references

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. Joseph Francois, 2004. "Assessing the Impact of Trade Policy on Labor Markets and Production," Tinbergen Institute Discussion Papers 04-058/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. Joseph Francois & Kevin Grier & Douglas Nelson, 2004. "Globalization, Roundaboutness, and Relative Wages," Tinbergen Institute Discussion Papers 04-021/2, Tinbergen Institute. [Downloadable!]
    Other versions:
  3. Mehari Mekonnen Akalu, 2002. "Measuring and Ranking Value Drivers," Tinbergen Institute Discussion Papers 02-043/2, Tinbergen Institute. [Downloadable!]
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