AbstractThis paper addresses a complex of globalization issues: the effect of globalization on the skill premium; the effect of globalization on unemployment; the relative importance of globalization and exogenous technical change; the effect of globalization on the ability of national governments to conduct independent social policies. Thinking about these topics has been dominated by a large empirical literature concluding that trade has played a relatively minor role in the rise of the skill premium, while exogenous skill-biased technical change has played a major role. This paper replaces the focus on inter-sectoral substitution at the heart of the Stolper-Samuelson theorem with attention to intra-sectoral relations between inputs. Specifically, I assume that out-sourcing and unskilled labor are highIy substitutable and that equipment and skilIed labor are complementary , that production methods are flexible, and that the country undertaking out-sourcing has a significantIy different structure from that providing it. Globalization then offers a simple and immediate possible explanation for the prominent stylized facts regarding the emergence of the skill premium and for the presence of skill-biased technical change. Trade vs. technology remains as an empirical issue, though, because exogenous neutral technological change offers an alter-native possible explanation.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 02-088/2.
Date of creation: 04 Sep 2002
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fragmentation; equipment utilization; out-sourcing; input substitution; input complementarity.;
Find related papers by JEL classification:
- F02 - International Economics - - General - - - International Economic Order; Noneconomic International Organizations;; Economic Integration and Globalization: General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-12-02 (All new papers)
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