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

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  • Joseph Francois

    ()
    (Erasmus University Rotterdam, and CEPR)

  • Douglas R. Nelson

    (Murphy Institute of Political Economy)

Abstract

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

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Bibliographic Info

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

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References

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  43. repec:dgr:uvatin:2098006 is not listed on IDEAS
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Citations

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Cited by:
  1. Joseph Francois & Kevin Grier & Douglas Nelson, 2004. "Globalization, Roundaboutness, and Relative Wages," Tinbergen Institute Discussion Papers 04-021/2, Tinbergen Institute.
  2. Joseph F. Francois, 2004. "Assessing the Impact of Trade Policy on Labour Markets and Production," Economie Internationale, CEPII research center, issue 99, pages 27-47.
  3. Mehari Mekonnen Akalu, 2002. "Measuring and Ranking Value Drivers," Tinbergen Institute Discussion Papers 02-043/2, Tinbergen Institute.
  4. Dluhosch, Barbara, 2006. "Intraindustry trade and the gains from fragmentation," The North American Journal of Economics and Finance, Elsevier, vol. 17(1), pages 49-64, March.

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