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Globalization and Skill Biased Technical Change: The Implications of Labor Market Rigidities

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Abstract

Traditional Heckscher-Ohlin reasoning predicts that in open economies sector bias of technical change determines wages and may induce firms to lower skill ratios. Skill bias plays a minor role – at best. The paper discusses sufficient conditions for skill bias of ICT nevertheless to be a major source of labor market developments. As it turns out, labor market implications can differ fundamentally depending on factor market institutions: with flexible labor markets, labor market implications fundamentally depend on demand side elasticities, whereas labor market rigidities make the elasticities on the supply side decisive. The latter may also explain why firms actually increase skill ratios.

Suggested Citation

  • Dluhosch, Barbara, 2008. "Globalization and Skill Biased Technical Change: The Implications of Labor Market Rigidities," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 61(1), pages 25-45.
  • Handle: RePEc:ris:ecoint:0042
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    Cited by:

    1. Horgos Daniel, 2012. "International Outsourcing and Wage Rigidity," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-28, June.

    More about this item

    Keywords

    International Trade; Information and Communication Technologies; Labor Markets; Wage Rigidity;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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