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Can Trade Explain the Sector Bias of Skill-biased Technical Change?

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  • Robert Stehrer

    ()
    (The Vienna Institute for International Economic Studies, wiiw)

Abstract

There is evidence that the skilled to unskilled wage rates were rising in the 1980s and at the beginning of the 1990s. This can potentially be explained by a Heckscher-Ohlin framework where economic integration implies that the advanced countries specialize in skilled-labour-intensive industries and developing countries in unskilled-labour-intensive industries. However, actual trade figures show that import penetration was particularly high in the skill-intensive industry segments also for trade integration with developing economies, which would imply a falling relative wage rate of skilled workers in the advanced countries in the Heckscher-Ohlin framework. If, however, these trade patterns induce relatively stronger skill-biased technical progress in the skill-intensive sectors, then the effect of trade would again be a potential reason for the widening of the wage differential between skilled and unskilled workers in the advanced countries. This paper presents some evidence that (negative) employment effects or positive productivity effects due to trade integration are particularly strong in the skill-intensive industries which supports the hypothesis above.

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Bibliographic Info

Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 30.

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Date of creation: May 2004
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Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:30

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Keywords: skill-biased technical change; technology; trade and labour markets;

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References

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  1. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1995. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," NBER Chapters, in: Differences and Changes in Wage Structures, pages 25-66 National Bureau of Economic Research, Inc.
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  17. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
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Cited by:
  1. Özlem Onaran, 2008. "The effect of import penetration on labor market outcomes in Austrian manufacturing industry," Department of Economics Working Papers wuwp119, Vienna University of Economics, Department of Economics.
  2. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
  3. Özlem Onaran, 2007. "Jobless growth in the Central and Eastern European Countries: A country specific panel data analysis for the manufacturing industry," Department of Economics Working Papers wuwp103, Vienna University of Economics, Department of Economics.

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