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Globalization, co-operation costs, and wage inequalities


  • Edward Anderson
  • Paul J. G. Tang
  • Adrian Wood


The falling cost of international business travel and communication motivates highly-skilled workers who live in developed countries to spend more of their time co-operating with less-skilled workers in developing countries. This tends to narrow the gap between developed and developing countries in the wages of less-skilled workers, but to widen the wage gap within developed countries between highly-skilled and less-skilled workers. The paper formalizes this mechanism and tests it on data for the United States and developing countries. The two effects on wage inequalities of greater co-operation of highly-skilled workers with workers in developing countries both seem quantitatively important. Copyright 2006, Oxford University Press.

Suggested Citation

  • Edward Anderson & Paul J. G. Tang & Adrian Wood, 2006. "Globalization, co-operation costs, and wage inequalities," Oxford Economic Papers, Oxford University Press, vol. 58(4), pages 569-595, October.
  • Handle: RePEc:oup:oxecpp:v:58:y:2006:i:4:p:569-595

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    References listed on IDEAS

    1. Marion, Nancy P., 1984. "Nontraded goods, oil price increases and the current account," Journal of International Economics, Elsevier, vol. 16(1-2), pages 29-44, February.
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    Cited by:

    1. Anna Maria Mayda, 2006. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes toward Immigrants," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 510-530, August.
    2. Bas, Maria, 2008. "Trade, technology adoption and wage inequalities: theory and evidence," LSE Research Online Documents on Economics 28513, London School of Economics and Political Science, LSE Library.
    3. Ucal, Meltem & Bilgin, Mehmet Huseyin, 2009. "Income Inequality and FDI in Turkey: FM-OLS (Phillips-Hansen) Estimation and ARDL Approach to Cointegration," MPRA Paper 48765, University Library of Munich, Germany.
    4. Mayda, Anna Maria, 2005. "Who is Against Immigration? A Cross-Country Investigation of Individual Attitudes Towards Immigration," CEPR Discussion Papers 5055, C.E.P.R. Discussion Papers.
    5. Binelli Chiara, 2015. "How the wage-education profile got more convex: evidence from Mexico," The B.E. Journal of Macroeconomics, De Gruyter, vol. 15(2), pages 509-560, July.
    6. Johannes Fedderke & Yongcheol Shin & Prabhat Vaze, 2003. "Trade, Technology and Wage Inequality in the South African Manufacturing Sectors," ESE Discussion Papers 106, Edinburgh School of Economics, University of Edinburgh.
    7. Edward Anderson, 2014. "Time differences, communication and trade: longitude matters II," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 337-369, May.
    8. Milanovic, Branko, 2002. "Can we discern the effect of globalization on income distribution? evidence from household budget surveys," Policy Research Working Paper Series 2876, The World Bank.
    9. Maria Bas, 2008. "Trade, Technology Adoption and Wage Inequalities: Theory and Evidence," CEP Discussion Papers dp0902, Centre for Economic Performance, LSE.
    10. Branko Milanovic, 2005. "Can We Discern the Effect of Globalization on Income Distribution? Evidence from Household Surveys," World Bank Economic Review, World Bank Group, vol. 19(1), pages 21-44.
    11. Adrian Wood (ODID), "undated". "A practical Heckscher-Ohlin model," QEH Working Papers qehwps170, Queen Elizabeth House, University of Oxford.
    12. Meltem Ucal & Alfred Albert Haug & Mehmet Hüseyin Bilgin, 2016. "Income inequality and FDI: evidence with Turkish data," Applied Economics, Taylor & Francis Journals, vol. 48(11), pages 1030-1045, March.
    13. Fatima, Syeda Tamkeen, 2014. "Off-Shoring and Wage Inequality: where do we stand?," IEE Working Papers 207, Institut fuer Entwicklungsforschung und Entwicklungspolitik, Ruhr-Universitaet Bochum.

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