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Relative Wages, Openness and Skill-Biased Technological Change

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  • Görg, Holger

    ()
    (Kiel Institute for the World Economy)

  • Strobl, Eric

    ()
    (Ecole Polytechnique, Paris)

Abstract

Standard neo-classical trade theory predicts that trade liberalisation should cause a fall in wage inequality in developing countries through a decrease in the relative demand for skilled labour. Recent studies of a number of developing countries, however, find evidence to the contrary. Using a panel of manufacturing firms in the 1990s we investigate whether skillbiased technological change induced through imports of technology-intensive capital goods or export activity may provide an explanation for the increase in relative wages of skilled workers in Ghana. Estimates of a skilled worker relative demand equation based on a translog cost function show that changes in technology through a greater inflow of foreign machinery is found to be indeed consistent with skill-biased technological change in Ghana.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 596.

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Length: 22 pages
Date of creation: Oct 2002
Date of revision:
Handle: RePEc:iza:izadps:dp596

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Keywords: wage inequality; trade liberalisation; skill-biased technological change;

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References

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  1. Beyer, Harald & Rojas, Patricio & Vergara, Rodrigo, 1999. "Trade liberalization and wage inequality," Journal of Development Economics, Elsevier, Elsevier, vol. 59(1), pages 103-123, June.
  2. Bruce A. Blonigen & Matthew J. Slaughter, 2001. "Foreign-Affiliate Activity And U.S. Skill Upgrading," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 362-376, May.
  3. Navaretti, Giorgio Barba & Soloaga, Isidro & Takacs, Wendy, 2000. "Vintage Technologies and Skill Constraints: Evidence from U.S. Exports of New and Used Machines," World Bank Economic Review, World Bank Group, World Bank Group, vol. 14(1), pages 91-109, January.
  4. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Direct Investment and Relative Wages: Evidence from Mexico's Maquiladoras," NBER Working Papers 5122, National Bureau of Economic Research, Inc.
  5. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers, Center for Economic Studies, U.S. Census Bureau 01-05, Center for Economic Studies, U.S. Census Bureau.
  6. Stephen Machin & John Van Reenen, 1998. "Technology And Changes In Skill Structure: Evidence From Seven Oecd Countries," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 113(4), pages 1215-1244, November.
  7. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  8. Head, Keith & Ries, John, 2002. "Offshore production and skill upgrading by Japanese manufacturing firms," Journal of International Economics, Elsevier, Elsevier, vol. 58(1), pages 81-105, October.
  9. Pissarides, Christopher A, 1997. "Learning by Trading and the Returns to Human Capital in Developing Countries," World Bank Economic Review, World Bank Group, World Bank Group, vol. 11(1), pages 17-32, January.
  10. Lucy Chennells & John Van Reenen, 1999. "Has technology hurt less skilled workers? A survey of the micro-econometric evidence," IFS Working Papers, Institute for Fiscal Studies W99/27, Institute for Fiscal Studies.
  11. Haskel, Jonathan E, 2000. "Trade and Labor Approaches to Wage Inequality," Review of International Economics, Wiley Blackwell, Wiley Blackwell, vol. 8(3), pages 397-408, August.
  12. Liu, Jin-Tan & Tsou, Meng-Wen & Hammitt, James K, 2001. "The Impact of Advanced Technology Adoption on Wage Structures: Evidence from Taiwan Manufacturing Firms," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 68(271), pages 359-78, August.
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Cited by:
  1. Lo Turco, Alessia & Maggioni, Daniela, 2013. "Does Trade Foster Employment Growth in Emerging Markets? Evidence from Turkey," World Development, Elsevier, Elsevier, vol. 52(C), pages 1-18.
  2. Meschi, Elena & Vivarelli, Marco, 2007. "Globalization and Income Inequality," IZA Discussion Papers 2958, Institute for the Study of Labor (IZA).
  3. Gupta, Manash Ranjan & Dutta, Priya Brata, 2012. "Skilled–unskilled wage inequality, product variety, public input and increasing returns: A static general equilibrium analysis," Economic Modelling, Elsevier, Elsevier, vol. 29(2), pages 502-513.
  4. Ilina Srour & Marco Vivarelli & Erol Taymaz, 2013. "Technological Change and Skill-based Employment Disparities: Evidence from Turkey," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE) dises1393, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
  5. Srour, Ilina & Taymaz, Erol & Vivarelli, Marco, 2013. "Skill-Biased Technological Change and Skill-Enhancing Trade in Turkey: Evidence from Longitudinal Microdata," IZA Discussion Papers 7320, Institute for the Study of Labor (IZA).
  6. Charles Ackah, & Oliver Morrissey, & Simon Appleton, . "Who Gains from Trade Protection in Ghana? A Household-Level Analysis," Discussion Papers 07/02, University of Nottingham, CREDIT.
  7. Ana Margarida Fernandez & Pablo Fajnzylber, 2004. "International Technology Diffusion and the Demand for Skilled Labor: Evidence from East Asia and Latin America," Econometric Society 2004 Latin American Meetings, Econometric Society 290, Econometric Society.
  8. Ilina Srour & Erol Taymaz & Marco Vivarelli, 2014. "Globalization, Technology and Skills: Evidence from Turkish Longitudinal Microdata," ERC Working Papers, ERC - Economic Research Center, Middle East Technical University 1405, ERC - Economic Research Center, Middle East Technical University, revised Jun 2014.
  9. Fajnzylber, Pablo & Fernandes,Ana Margarida, 2004. "International economic activities and the demand for skilled labor: evidence from Brazil and China," Policy Research Working Paper Series 3426, The World Bank.

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