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Policy Implications of the Trade and Wages Debate

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  • Alan V. Deardorff

Abstract

This paper examines the choice of policies to redistribute income in response to an increase in inequality caused by a rise in the differential wage paid to skilled labor compared with unskilled labor. The main issue is whether the appropriate policy response depends on whether the cause of the increased skill differential is ‘trade’—increased competition with low‐skilled workers abroad—or technological change. The analysis is conducted within the context of a two‐sector Heckscher–Ohlin trade model augmented to allow endogenous determination of the level of skill.

Suggested Citation

  • Alan V. Deardorff, 2000. "Policy Implications of the Trade and Wages Debate," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 478-496, August.
    • Handle: RePEc:bla:reviec:v:8:y:2000:i:3:p:478-496
    DOI: 10.1111/1467-9396.00236
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    Cited by:

    1. Arghya Ghosh & Peter E. Robertson & Marie-Claire Robitaille, 2016. "Does Globalisation Affect Crime? Theory and Evidence," The World Economy, Wiley Blackwell, vol. 39(10), pages 1482-1513, October.
    2. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," MPRA Paper 83525, University Library of Munich, Germany.
    3. Sunil Mithas & Jonathan Whitaker, 2007. "Is the World Flat or Spiky? Information Intensity, Skills, and Global Service Disaggregation," Information Systems Research, INFORMS, vol. 18(3), pages 237-259, September.
    4. Jurgen Meckl & Benjamin Weigert, 2003. "Globalization, technical change and the skill premium: magnification effects from human - capital investments," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 319-336.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D30 - Microeconomics - - Distribution - - - General

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