Globalization, wage volatility and the welfare of workers
AbstractThis paper analyzes the effects of trade liberalization on the level and volatility of factor returns, in a model with identical technologies across industries and industry-specific uncertainty. The results show an increase in the return to capital and, under certain conditions, a decline in the real wages and welfare of workers, along with an expansion of wage dispersion and volatility. Unlike the Solper-Samuelson mechanism, our results do not depend on the factor intensity of imports and exports and are borne out by all patterns of trade, including among industrialized countries, suggesting that the traditional analysis has missed some important linkages between trade and wages. Copyright Blackwell Publishing Ltd 2005..
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/9227.
Date of creation: 2005
Date of revision:
Publication status: Published in: Review of International Economics (2005) v.13 n° 2,p.237-249
Other versions of this item:
- Daniel A. Traca, 2005. "Globalization, Wage Volatility, and the Welfare of Workers," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 237-249, 05.
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- Karabay, Bilgehan & McLaren, John, 2010.
"Trade, offshoring, and the invisible handshake,"
Journal of International Economics,
Elsevier, vol. 82(1), pages 26-34, September.
- Svaleryd, Helena & Vlachos, Jonas, 2000. "Does Financial Development Lead to Trade Liberalization?," Research Papers in Economics 2000:11, Stockholm University, Department of Economics.
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