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The Effect of Technology and Trade on Wage Differentials Between Nonproduction and Production Workers in Canadian Manufacturing

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  • Baldwin, John R.
  • Raffiquzzaman, Mohammed

Abstract

The 1980s and 1990s have seen a rising share of skilled labour in total employment in the manufacturing sector of Canada. At the same time, the wage premium for skilled workers has increased, thereby increasing the inequality between skilled and unskilled workers. There is a disagreement about the causes of these changes. Several hypotheses have been offered to explain them-increased international competition, changes in the relative supply of more-skilled versus less-skilled workers, and skilled-augmenting technological change. This paper analyzes the nature, pattern and causes of the shifts in the composition of employment in manufacturing. The paper describes the composition of employment in manufacturing. It focuses on the direction and magnitude of shifts in the proportion of nonproduction workers employed within manufacturing and across sectors within manufacturing. It also investigates the extent to which wage differentials between nonproduction and production workers have widened in the 1980s. In addition, it assesses the extent to which these changes are associated with trade and technology use. The results indicate that the rising wage differentials are associated with both increased trade intensity and the types of technologies that are being used in the plant.

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Bibliographic Info

Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 1998098e.

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Date of creation: 06 May 1998
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Handle: RePEc:stc:stcp3e:1998098e

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Keywords: Industries; Labour; Wages; salaries and other earnings;

References

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  1. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155, September.
  2. Picot, Garnett & Baldwin, John R., 1994. "Employment Generation by Small Producers in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 1994070e, Statistics Canada, Analytical Studies Branch.
  3. Adrian Wood, 1995. "How Trade Hurt Unskilled Workers," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 57-80, Summer.
  4. Richard B. Freeman, 1995. "Are Your Wages Set in Beijing?," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 15-32, Summer.
  5. Richard B. Freeman & Karen Needels, 1991. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Working Papers 3827, National Bureau of Economic Research, Inc.
  6. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  7. Mellow, Wesley, 1982. "Employer Size and Wages," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 495-501, August.
  8. Murphy, Kevin M & Welch, Finis, 1992. "The Structure of Wages," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 285-326, February.
  9. Johnson, Joanne & Baldwin, John R. & Gray, Tara, 1996. "Technology-induced Wage Premia in Canadian Manufacturing Plants During the 1980s," Analytical Studies Branch Research Paper Series 1996092e, Statistics Canada, Analytical Studies Branch.
  10. Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
  11. Brown, Charles & Medoff, James, 1989. "The Employer Size-Wage Effect," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1027-59, October.
  12. 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, vol. 109(2), pages 367-97, May.
  13. Dunne, Timothy & Schmitz, James A, Jr, 1995. "Wages, Employment Structure and Employer Size-Wage Premia: Their Relationship to Advanced-Technology Usage at US Manufacturing Establishments," Economica, London School of Economics and Political Science, vol. 62(245), pages 89-107, February.
  14. Jacob Mincer, 1991. "Human Capital, Technology, and the Wage Structure: What Do Time Series Show?," NBER Working Papers 3581, National Bureau of Economic Research, Inc.
  15. Edward E. Leamer, 1994. "Trade, Wages and Revolving Door Ideas," NBER Working Papers 4716, National Bureau of Economic Research, Inc.
  16. 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.
  17. J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 33-55, Summer.
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Citations

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Cited by:
  1. Baldwin, John R. & Hanel, Peter, 2000. "Multinationals and the Canadian Innovation Process," Analytical Studies Branch Research Paper Series 2000151e, Statistics Canada, Analytical Studies Branch.
  2. Baldwin, John R. & Gellatly, Guy, 1998. "Are There High-tech Industries or Only High-tech Firms? Evidence from New Technology-based Firms," Analytical Studies Branch Research Paper Series 1998120e, Statistics Canada, Analytical Studies Branch.
  3. Zakhilwal, Omar, 2001. "The Impact of International Trade on the Wages of Canadians," Analytical Studies Branch Research Paper Series 2001156e, Statistics Canada, Analytical Studies Branch.
  4. Elvira del Rosario Velarde López & Ma. Zóchitl Araiza Garza & Eunice Saraí Coronado Rojas, 2012. "Factors of the firm and the entrepreneur associated with technological capabilities of some metalworking SMEs in Mexico," Economía, Instituto de Investigaciones Económicas y Sociales (IIES). Facultad de Ciencias Económicas y Sociales. Universidad de Los Andes. Mérida, Venezuela, vol. 37(33), pages 85-106, January-j.
  5. Dhaliwal, Naginder & Baldwin, John R., 2000. "Labour Productivity Differences Between Domestic and Foreign-controlled Establishments in the Canadian Manufacturing Sector," Analytical Studies Branch Research Paper Series 2000118e, Statistics Canada, Analytical Studies Branch.
  6. Johnson, Joanne & Baldwin, John R. & Gray, Tara, 1996. "Technology-induced Wage Premia in Canadian Manufacturing Plants During the 1980s," Analytical Studies Branch Research Paper Series 1996092e, Statistics Canada, Analytical Studies Branch.
  7. Baldwin, John R. & Gellatly, Guy, 1998. "La haute technologie est-elle l'exclusivite des entreprises ou peut-elle s'appliquer a l'ensemble d'un secteur d'activite? Donnees recueillies aupres des nouvelles entreprises axees sur la technologie," Direction des etudes analytiques : documents de recherche 1998120f, Statistics Canada, Direction des etudes analytiques.

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