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Competition, Trade and Wages

In: Trade, Investment, Migration and Labour Market Adjustment

Author

Listed:
  • J. Peter Neary

    (University College
    CEPR)

Abstract

Perhaps the single most striking feature of rich-country labour markets in recent decades is what Nickell and Bell (1995) call ‘the collapse in demand for the unskilled across the OECD’. In ‘Anglo-Saxon’ countries, this shows up as an increase in the premium paid to skilled relative to unskilled workers; in Continental Europe, it manifests itself as an increase in long-term unemployment among the unskilled. There seems to be fairly wide agreement that these differences reflect the response of different labour market institutions to common shocks. But there is no consensus on the nature of those shocks. Much popular discussion and some academic observers (such as Wood (1994) and Leamer (1998)) have blamed ‘globalisation’ in general, and increased imports from low-wage newly industrialised countries (NICs) in particular. By contrast, a majority of academic commentators have pointed instead to skill-biased technological progress as the explanation.

Suggested Citation

  • J. Peter Neary, 2002. "Competition, Trade and Wages," International Economic Association Series, in: David Greenaway & Richard Upward & Katharine Wakelin (ed.), Trade, Investment, Migration and Labour Market Adjustment, chapter 3, pages 28-46, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-4039-2018-8_3
    DOI: 10.1057/9781403920188_3
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    Cited by:

    1. Lionel Fontagné & Daniel Mirza, 2001. "International Trade and Rent Sharing in Developed and Developing countries," Working Papers 2001-09, CEPII research center.
    2. Udo Kreickemeier & Douglas Nelson, 2017. "Fair Wages, Unemployment, and Technological Change in a Global Economy," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 8, pages 205-235, World Scientific Publishing Co. Pte. Ltd..
    3. J. Peter Neary, 2000. "Monopolistic competition and international trade theory," Working Papers 200025, School of Economics, University College Dublin.
    4. J.Peter Neary, 2002. "Foreign Competition and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 10(4), pages 680-693, November.
    5. Naércio Aquino Menezes Filho & Marc-Andreas Muendler, 2007. "Labor Reallocation in Response to Trade Reform," CESifo Working Paper Series 1936, CESifo.
    6. Weiss, Pia & Wälde, Klaus, 2001. "Globalisation is good for you: Distributional effects of mergers caused by globalisation," Dresden Discussion Paper Series in Economics 07/01, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
    7. Ekholm, Karolina & Midelfart, Karen Helene, 2005. "Relative wages and trade-induced changes in technology," European Economic Review, Elsevier, vol. 49(6), pages 1637-1663, August.
    8. Denny, Kevin & Harmon, Colm & Lydon, Reamonn, 2002. "Cross Country Evidence on the Returns to Education: Patterns and Explanations," CEPR Discussion Papers 3199, C.E.P.R. Discussion Papers.
    9. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 681-703, September.
    10. Donald Robbins, 2003. "The impact of trade liberalization upon inequality in developing countries - A review of theory and evidence-," Documentos de Economía 3601, Universidad Javeriana - Bogotá.
    11. Sener, Fuat, 2006. "Labor market rigidities and R&D-based growth in the global economy," Journal of Economic Dynamics and Control, Elsevier, vol. 30(5), pages 769-805, May.
    12. Wilfred J. Ethier, 2002. "Globalization, Globalisation," Tinbergen Institute Discussion Papers 02-088/2, Tinbergen Institute.
    13. A. B. Atkinson, 2003. "Income Inequality in OECD Countries: Data and Explanations," CESifo Economic Studies, CESifo Group, vol. 49(4), pages 479-513.
    14. Ethier, Wilfred J., 2005. "Globalization, globalisation: Trade, technology, and wages," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 237-258.
    15. Satya P. Das, 2003. "Trade and Relative Wage in a Global Economy," Review of International Economics, Wiley Blackwell, vol. 11(2), pages 397-411, May.
    16. 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," Thesis Commons bmxag, Center for Open Science.
    17. Nathalie Chusseau & Michel Dumont & Joël Hellier, 2008. "Explaining Rising Inequality: Skill‐Biased Technical Change And North–South Trade," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 409-457, July.
    18. Foster-McGregor, Neil & Nomaler, Önder & Verspagen, Bart, 2021. "Job Automation Risk, Economic Structure and Trade: a European Perspective," Research Policy, Elsevier, vol. 50(7).
    19. repec:ilo:ilowps:365055 is not listed on IDEAS
    20. Bernard Hoekman & Alan L. Winters, 2005. "Trade and Employment: Stylized Facts and Research Findings," Working Papers 7, United Nations, Department of Economics and Social Affairs.

    More about this item

    Keywords

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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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