Capital Accumulation, Trade Liberalization and Rising Wage Inequality: The Case of Argentina
AbstractCapital accumulation can modify the relative productivity between skilled and unskilled workers, thus leading to changes in the wage structure. In particular, if capital goods are relatively more complementary to skilled workers in the production function (skill-biased technologies), a positive correlation between investment in physical capital and the wage premium would be expected. In this paper we present evidence for this hypothesis by taking advantage of the variability in wage premia and capital investment across industries in the Argentine manufacturing sector. We conclude that the wage premium for workers with complete college education increased more in those industries with higher investment in machinery and equipment. As in Galiani and Sanguinetti (2003, in this journal), the wage premium also grew more in those sectors which faced strong import competition, although this effect is empirically less relevant than the capital accumulation effect.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CEDLAS, Universidad Nacional de La Plata in its series CEDLAS, Working Papers with number 0005.
Length: 15 pages
Date of creation: Jan 2004
Date of revision:
wage premium; capital accumulation; technological change; trade liberalization; wage inequality; Argentina.;
Other versions of this item:
- Pablo Acosta & Leonardo Gasparini, 2007. "Capital Accumulation, Trade Liberalization, and Rising Wage Inequality: The Case of Argentina," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 793-812.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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.:
- Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
- Edward E. Leamer, 1994. "Trade, Wages and Revolving Door Ideas," NBER Working Papers 4716, National Bureau of Economic Research, Inc.
- Claudia Goldin & Lawrence F. Katz, 1996.
"The Origins of Technology-Skill Complementarity,"
NBER Working Papers
5657, National Bureau of Economic Research, Inc.
- Pabo Sanguinetti & Sebastian Galiani, 2003.
"The impact of trade liberalizationon wage inequality:Evidence from Argentina,"
Department of Economics Working Papers
011, Universidad Torcuato Di Tella.
- Galiani, Sebastian & Sanguinetti, Pablo, 2003. "The impact of trade liberalization on wage inequality: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 72(2), pages 497-513, December.
- Sebastian Galiani & Pablo Sanguinetti, 2003. "The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina," Working Papers 65, Universidad de San Andres, Departamento de Economia, revised Oct 2003.
- Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000.
"Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis,"
Econometric Society, vol. 68(5), pages 1029-1054, September.
- Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
- David Card & John E. DiNardo, 2002.
"Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles,"
Journal of Labor Economics,
University of Chicago Press, vol. 20(4), pages 733-783, October.
- David Card & John E. DiNardo, 2002. "Skill Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," NBER Working Papers 8769, National Bureau of Economic Research, Inc.
- Francesco Caselli, 1999. "Technological Revolutions," American Economic Review, American Economic Association, vol. 89(1), pages 78-102, March.
- Daron Acemoglu, 2000.
"Technical Change, Inequality, and the Labor Market,"
NBER Working Papers
7800, National Bureau of Economic Research, Inc.
- Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
- Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
- Leonardo Gasparini & Nora Lustig, 2011.
"The rise and fall of income inequality in Latin America,"
213, ECINEQ, Society for the Study of Economic Inequality.
- Leonardo Gasparini & Nora Lustig, 2011. "The Rise and Fall of Income Inequality in Latin America," Working Papers 1110, Tulane University, Department of Economics.
- Leonardo Gasparini & Nora Lustig, 2011. "The Rise and Fall of Income Inequality in Latin America," CEDLAS, Working Papers 0118, CEDLAS, Universidad Nacional de La Plata.
- Leonardo Gasparini & Sebastián Galiani & Guillermo Cruces & Pablo Acosta, 2012.
"Educational Upgrading and Returns to Skills in Latin America. Evidence from a Supply-Demand Framework, 1990-2010,"
CEDLAS, Working Papers
0127, CEDLAS, Universidad Nacional de La Plata.
- Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo, 2011. "Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010," Policy Research Working Paper Series 5921, The World Bank.
- Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo A., 2011. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010," IZA Discussion Papers 6244, Institute for the Study of Labor (IZA).
- Leonardo Gasparini, 2003. "Argentina´s Distributional Failure: The role of Integration and Public Policies," CEDLAS, Working Papers 0001, CEDLAS, Universidad Nacional de La Plata.
- Tebaldi, Edinaldo & Kim, Jongsung, 2008.
"Two Tales on the Returns to Education: The Impact of Trade on Wages,"
9698, University Library of Munich, Germany.
- Edinaldo Tebaldi & Jongsung Kim, 2010. "Two Tales on the Returns to Education: The Impact of Trade on Wages," Review of Development Economics, Wiley Blackwell, vol. 14(4), pages 768-782, November.
- Lucio Castro & Daniel Saslavsky, 2005. "Trade, Poverty and Employment: The Social Consequences of Integration with China," International Trade 0512017, EconWPA.
- Ricardo Bebczuk, 2009. "SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence," CEDLAS, Working Papers 0080, CEDLAS, Universidad Nacional de La Plata.
- Choi, E. Kwan, 2011. "To integrate with a high- or low-wage country: That is the question," International Review of Economics & Finance, Elsevier, vol. 20(4), pages 792-799, October.
- Leonardo Gasparini, 2003. "Argentina's Distributional Failure: The Role of Integration and Public Policy," IDB Publications 42798, Inter-American Development Bank.
- Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2007.
"The impact of trade with China and India on Argentina's manufacturing employment,"
Policy Research Working Paper Series
4153, The World Bank.
- Castro, Lucio & Olarreaga, Marcelo & Saslavsky, Daniel, 2006. "The impact of trade with China and India on Argentina’s manufacturing employment," MPRA Paper 538, University Library of Munich, Germany.
- Lucio Castro, 2005. "Tango with the Dragon: Employment Effects of Trade Integration with China. The Case of Argentina," International Trade 0509004, EconWPA.
- Castro, Lucio & Saslavsky, Daniel, 2008. "Trade with China and India and Manufacturing Labour Demand in Argentina," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- López Bóo, Florencia, 2010. "Returns to Education and Macroeconomic Shocks: Evidence from Argentina," IZA Discussion Papers 4753, Institute for the Study of Labor (IZA).
- Demombynes, Gabriel & Metzler, Johannes, 2008. "Connecting the unobserved dots : a decomposition analysis of changes in earnings inequality in urban Argentina, 1980-2002," Policy Research Working Paper Series 4624, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ana Pacheco).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.