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Trade, Technology and Labour Markets: Empirical Controversies in the Light of the Jones Model

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  • Michael Pflüger
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    Abstract

    The deterioration of the income and employment position of unskilled workers in the OECD since the 1980s is a well-documented fact. The debate about the causes of this development is dominated by two competing hypotheses, "North-South Trade" ("globalisation") and technological progress. Several empirical methodologies have been used to identify and quantify the importance of these two explanations: factor content analyses, consistency checks, regression analyses and numerical methods. However, no consensus has been achieved so far and there is considerable methodological controversy. This paper uses Jones's (1965) exposition of the standard trade model as analytical backbone to identify and settle the sources of disagreement, to provide a synthesis of existing results, to derive new insights, and to provide a comprehensive assessment of the aforementioned empirical methodologies.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40185.de/dp328.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 328.

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    Length: 32 p.
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp328

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    Related research

    Keywords: North-South Trade; Technology; Wage Inequality; Unemployment;

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    1. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
    2. Robert E. Baldwin, 1999. "Inferring Relative Factor Price Changes from Quantitative Data," NBER Working Papers 7019, National Bureau of Economic Research, Inc.
    3. Lisandro Abrego & John Whalley, 1999. "The Choice of Structural Model in Trade-Wages Decompositions," CSGR Working papers series 34/99, Centre for the Study of Globalisation and Regionalisation (CSGR), University of Warwick.
    4. Robert E. Baldwin & Glen G. Cain, 1997. "Shifts in U.S. Relative Wages: The Role of Trade, Technology and Factor Endowments," NBER Working Papers 5934, National Bureau of Economic Research, Inc.
    5. Robert Z. Lawrence & Carolyn L. Evans, 1996. "Trade and Wages: Insights from the Crystal Ball," NBER Working Papers 5633, National Bureau of Economic Research, Inc.
    6. Damien NEVEN. & Charles WYPLOSZ, 1996. "Relative Prices, Trade and Restructuring in European Industry," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9615, Université de Lausanne, Faculté des HEC, DEEP.
    7. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
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