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The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France

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  • Vanessa Strauss-Kahn

Abstract

Growth in international trade and globalization has been correlated in nearly all countries with a worsening of the less skilled labor situation relative to the skilled. In this empirical paper, I show that an important component of recent globalization in France has been a huge growth in vertical specialization -- the completion of the different production stages of a good in different countries. By shifting relative labor demand across countries, globalization of this form could explain the poor relative showing of unskilled labor in industrial countries. Using input-output tables and labor data, I find that in France vertical specialization -- defined as the share of imported inputs in production -- rose from 9% in 1977 to 14% in 1993. Further estimations show that vertical specialization contributed from 11% to 15% of the decline in the share of unskilled workers in French manufacturing employment for the 1977-1985 period and for 25% of the decline in the 1985-1993 period.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9716.

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Date of creation: May 2003
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Publication status: published as Baldwin, Robert E. and L. Alan Winters (eds.) Challenges to globalization: Analyzing the economics NBER Economic Research Conference Report series. Chicago and London: University of Chicago Press, 2004.
Handle: RePEc:nbr:nberwo:9716

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  1. Robert C. Feenstra, . "Integration Of Trade And Disintegration Of Production In The Global Economy," Department of Economics, California Davis - Department of Economics 98-06, California Davis - Department of Economics.
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  3. Olivier Cortès & Sébastien Jean, 1997. "Quel est l'impact du commerce extérieur sur la productivité et l'emploi ?," Working Papers, CEPII research center 1997-08, CEPII research center.
  4. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 40(1), pages 7-72, March.
  5. 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.
  6. Craig Burnside & Martin Eichenbaum & Sergio Rebelo, 1995. "Capital Utilization and Returns to Scale," NBER Working Papers 5125, National Bureau of Economic Research, Inc.
  7. Stephen Machin & Annette Ryan & John Van Reenen, 1996. "Technology and changes in skill structure: Evidence from an international panel of industries," IFS Working Papers, Institute for Fiscal Studies W96/06, Institute for Fiscal Studies.
  8. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Department of Economics, California Davis - Department of Economics 95-14, California Davis - Department of Economics.
  9. Anxo, Dominique & Sterner, Thomas, 1994. "Using electricity data to measure capital utilization," Energy Economics, Elsevier, Elsevier, vol. 16(1), pages 63-74, January.
  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, MIT Press, vol. 109(2), pages 367-97, May.
  11. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
  12. David Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Jun, pages 79-99.
  13. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  14. Strauss-Kahn, Vanessa, 2005. "Firms' location decision across asymmetric countries and employment inequality," European Economic Review, Elsevier, Elsevier, vol. 49(2), pages 299-320, February.
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