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Globalization, Roundaboutness, and Relative Wages

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Author Info
Joseph Francois () (Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR)
Kevin Grier (University of Oklahoma)
Douglas Nelson (Tulane University & Leverhulme Centre (Nottingham))

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Abstract

We depart from the trade and wages literature and its emphasis on North-South trade, examining North-North by developing the basic linkages between trade-based integration and relative wages in an Ethier-type division of labor model. Using this model we identify a formal relationship between international trade, productivity, and wages. We then examine the trivariate relationship between trade, growth in total factor productivity (TFP), and the skill premium in a vector autoregression framework. We find evidence of a long-run relationship between growth in intermediate goods and changes in TFP. Controlling for this relationship we also find a positive relationship between trade and the skill-premium.

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Publisher Info
Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-021/2.

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Date of creation: 23 Feb 2004
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Handle: RePEc:dgr:uvatin:20040021

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Related research
Keywords: trade and wages globalization division of labor monopolistic competition intra-industry trade

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Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies

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References listed on IDEAS
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.:
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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 & Julia Woerz, 2007. "Producer Services, Manufacturing Linkages, and Trade," Tinbergen Institute Discussion Papers 07-045/2, Tinbergen Institute. [Downloadable!]
    Other versions:
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