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Technology, Trade and Inequality

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Author Info
Roger Bjørnstad and Terje Skjerpen () (Statistics Norway)

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Abstract

In recent decades new technology has led to increasing demand for well-educated labour at the expense of labour with lower education levels. Moreover, increased imports from low-cost countries have squeezed out many Norwegian manufacturing firms employing a sizeable share of workers with low education. In this article a large macroeconomic model for Norway (MODAG) is used to quantify the importance that technological developments and competition from low-cost countries have had for the economy and for low- and high-educated labour. The results show that above all technological developments, but also increased trade with low-cost countries, have reduced demand for low-educated labour relative to well-educated labour. Wage formation factors have however meant a) that technological developments have also benefited those with low education who still hold a job, and b) that a relative fall in prices on goods from poor parts of the world has kept down wage differentials.

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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 364.

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Date of creation: Dec 2003
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Handle: RePEc:ssb:dispap:364

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Related research
Keywords: Skill-bias technological change; international trade; centralized wage setting; inequality; labour demand; macroeconometric model.;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
E27 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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