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The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990

  • Robert C. Feenstra
  • Gordon H. Hanson

We estimate the relative influence of trade versus technology on wages in a "large-country" setting, where technological change affects product prices. Trade is measured by the foreign outsourcing of intermediate inputs, while technological change is measured by expenditures on high-technology capital such as computers. The estimation procedure we develop, which modifies the conventional "price regression," is able to distinguish whether product price changes are due to factor-biased versus sector-biased technology shifts. In our base specification we find that computers explain about 35 percent of the increase in the relative wage of nonproduction workers, while outsourcing explains 15 percent; both of these effects are higher in other specifications. © 2000 the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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Article provided by MIT Press in its journal The Quarterly Journal of Economics.

Volume (Year): 114 (1999)
Issue (Month): 3 (August)
Pages: 907-940

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Handle: RePEc:tpr:qjecon:v:114:y:1999:i:3:p:907-940
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