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International trade, technical change and wage inequality in the U.K. economy

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  • Engelmann, Sabine
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    Abstract

    "This paper examines the joint impact of international trade and technical change on U.K. wages across different skill groups. International trade is measured as changes in product prices and technical change as total factor productivity (TFP) growth. We take account of a multi-sector and multi-factor of production economy and use mandated wage methodology to offer a close theoretical-empirical relationship. We use data of the EU KLEMS database and analyse the impact of both, product price changes and TFP changes of 11 U.K. manufacturing sectors on factor rewards of high-, medium- and low-skilled workers. Results show that real wages of skill groups are driven by the sector bias of price change and TFP growth of selected sectors of production. Furthermore, for each year 1970-2005 we estimate the share of the three different skill groups on added value which indicate structural change in the U.K. economy. Empirical results show a structural change in the U.K. economy by the declined share of low-skilled workers and the increased share of medium-skilled and high-skilled workers over the years." (Author's abstract, IAB-Doku) ((en))

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    Bibliographic Info

    Paper provided by Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany] in its series IAB Discussion Paper with number 201208.

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    Length: 29 pages
    Date of creation: 20 Mar 2012
    Date of revision:
    Handle: RePEc:iab:iabdpa:201208

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    Keywords: Außenhandel; technischer Wandel; Einkommenseffekte; Lohnunterschied; verarbeitendes Gewerbe; Reallohn; Lohnhöhe; Qualifikationsstruktur; Arbeitskräftenachfrage; Beschäftigungseffekte; berufliche Qualifikation; Qualifikationsniveau; Hochqualifizierte; Niedrigqualifizierte; mittlere Qualifikation; Preisentwicklung; Produktivitätsentwicklung; Großbritannien;

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    References

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    1. Berman, E. & Bound, J. & Machin, S., 1997. "Implications of Skill-Biased Technological Change: International Evidence," Papers 25, Centre for Economic Performance & Institute of Economics.
    2. 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.
    3. Amanda Gosling & Stephen Machin & Costas Meghir, 1994. "The changing distribution of male wages in the UK," IFS Working Papers W94/13, Institute for Fiscal Studies.
    4. Haskel, Jonathan & Slaughter, Matthew J, 2001. "Trade, Technology and U.K. Wage Inequality," Economic Journal, Royal Economic Society, vol. 111(468), pages 163-87, January.
    5. Attanasio, Orazio & Goldberg, Pinelopi & Pavcnik, Nina, 2003. "Trade Reforms and Wage Inequality in Colombia," CEPR Discussion Papers 4023, C.E.P.R. Discussion Papers.
    6. Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers 24, Centre for Economic Performance & Institute of Economics.
    7. Schmerer, Hans-Jörg, 2012. "Foreign direct investment and search unemployment : Theory and evidence," IAB Discussion Paper 201204, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, May.
    9. Haskel, Jonathan E. & Slaughter, Matthew J., 2002. "Does the sector bias of skill-biased technical change explain changing skill premia?," European Economic Review, Elsevier, vol. 46(10), pages 1757-1783, December.
    10. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
    11. Desjonqueres, Thibaut & Machin, Stephen & Van Reenen, John, 1999. " Another Nail in the Coffin? Or Can the Trade Based Explanation of Changing Skill Structures Be Resurrected?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(4), pages 533-54, December.
    12. 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.
    13. Poeschel, Friedrich, 2012. "The time trend in the matching function," IAB Discussion Paper 201203, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. Robert E. Baldwin & Glen G. Cain, 2000. "Shifts In Relative U.S. Wages: The Role Of Trade, Technology, And Factor Endowments," The Review of Economics and Statistics, MIT Press, vol. 82(4), pages 580-595, November.
    15. Savin, N Eugene & White, Kenneth J, 1977. "The Durbin-Watson Test for Serial Correlation with Extreme Sample Sizes or Many Regressors," Econometrica, Econometric Society, vol. 45(8), pages 1989-96, November.
    16. Johnson, G.E. & Stafford, F.P., 1993. "International Competition and Real Wages," Working Papers 323, Research Seminar in International Economics, University of Michigan.
    17. Jones, Ronald W & Scheinkman, Jose A, 1977. "The Relevance of the Two-Sector Production Model in Trade Theory," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 909-35, October.
    18. repec:fth:michin:323 is not listed on IDEAS
    19. Lynn Karoly & Gary Burtless, 1995. "Demographic change, rising earnings inequality, and the distribution of personal well-being, 1959–1989," Demography, Springer, vol. 32(3), pages 379-405, August.
    20. John Schmitt, 1993. "The Changing Structure of Male Earnings in Britain," CEP Discussion Papers dp0122, Centre for Economic Performance, LSE.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. "British workers hit hard"
      by chris dillow in Stumbling and Mumbling on 2014-04-22 13:28:12

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