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

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  • Niven Winchester

    ()
    (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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    1. 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.
    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. 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.
    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. 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.
    6. 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.
    7. Thomas Hertel & David Hummels & Maros Ivanic & Roman Keeney, 2004. "How Confident Can We Be in CGE-Based Assessments of Free Trade Agreements?," NBER Working Papers 10477, National Bureau of Economic Research, Inc.
    8. 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.
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