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Searching for the Smoking Gun: Did Trade Hurt Unskilled Workers?

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  • Niven Winchester

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    (Department of Economics, University of Otago)

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    Abstract

    We contribute to the trade-wage literature by conducting the first economy-wide analysis of the association between trade and wages in New Zealand. We find that increased imports since 1980 caused only a marginal increase in New Zealand wage inequality and, overall, increased trade (imports and exports) reduced wage inequality in this nation. As New Zealand imports of unskilled labour-intensive products relative to GDP are larger than those for other developed nations, we interpret these results as convincing evidence that trade is not responsible for rising wage inequality in developed nations.

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0605.pdf
    File Function: First version, 2006
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    Bibliographic Info

    Paper provided by University of Otago, Department of Economics in its series Working Papers with number 0605.

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    Length: 31 pages
    Date of creation: Sep 2006
    Date of revision: Sep 2006
    Handle: RePEc:otg:wpaper:0605

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    Web page: http://www.business.otago.ac.nz/econ
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    Keywords: trade and wages; skill classification;

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    References

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    1. Neven, Damien J & Wyplosz, Charles, 1996. "Relative Prices, Trade and Restructuring in European Industry," CEPR Discussion Papers 1451, C.E.P.R. Discussion Papers.
    2. Lisandro Abrego & John Whalley, 2003. "Goods market responses to trade shocks and trade and wages decompositions," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 747-757, August.
    3. Haskel, Jonathan & Slaughter, Matthew, 1999. "Trade, Technology and UK Wage Inequality," CEPR Discussion Papers 2091, C.E.P.R. Discussion Papers.
    4. Hertel, Thomas & David Hummels & Maros Ivanic & Roman Keeney, 2003. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," GTAP Working Papers 1324, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    5. 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.
    6. Tyers, R. & Yang, Y., 1996. "Trade with Asia and Skill Upgrading: Effects on Factor Markets in the Older Industrial Countries," CEPR Discussion Papers 346, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    7. 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.
    8. Dean Hyslop & Dave Mare & Jason Timmins, 2003. "Qualifications, Employment and the Value of Human Capital, 1986-2001," Treasury Working Paper Series 03/35, New Zealand Treasury.
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