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Fragmentation, Globalisation and Labour Markets

In: Trade, Investment, Migration and Labour Market Adjustment

Author

Listed:
  • Michael C. Burda

    (Humboldt University
    CEPR)

  • Barbara Dluhosch

    (University of the Federal Armed Forces)

Abstract

Most contributions to the debate on the role of trade versus technology in explaining labour market developments see the two forces operating separately in independent spheres. In this chapter, we study the impact of trade on labour markets transmitted by its effect on choice of technology. Two observations in particular motivate our interest in this issue. First, not only final goods production but production itself is becoming increasingly global. Recent revisions of trade statistics, which give more detailed information on the nature of products traded, suggest that trade in intermediates has significantly outpaced trade in final goods. Second, a more detailed examination of labour statistics reveals that the increase in the skill premium was accompanied by substantial shifts in the structure of employment (OECD (1996, 1999, 2000)). In particular, employment in service activities rose in tandem with the exposure of locals to foreign competition. The increase in services employment was not limited to lowskilled, poorly paid jobs, but rather has exhibited a bimodal pattern with growth especially strong at the lower and the upper end of the wage scale. In addition, the employment of professional, management and sales-related personnel has increased substantially faster than in other high skilled groups.1 These developments are indicative of fundamental changes in production methods and technology as the openness of economies increases. In addition, it suggests that the impact of trade on labour markets may be underrated in studies which neglect the indirect effect that increased openness has on labour markets via induced technical change.

Suggested Citation

  • Michael C. Burda & Barbara Dluhosch, 2002. "Fragmentation, Globalisation and Labour Markets," International Economic Association Series, in: David Greenaway & Richard Upward & Katharine Wakelin (ed.), Trade, Investment, Migration and Labour Market Adjustment, chapter 4, pages 47-65, Palgrave Macmillan.
  • Handle: RePEc:pal:intecp:978-1-4039-2018-8_4
    DOI: 10.1057/9781403920188_4
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    Cited by:

    1. Sell, Friedrich L., 2001. "Fragmentierung - Außenhandel unter den Bedingungen vertikaler Globalisierung: Ein Überblick," Working Papers in Economics 2001,2, Bundeswehr University Munich, Economic Research Group.
    2. Horgos, Daniel, 2009. "Labor market effects of international outsourcing: How measurement matters," International Review of Economics & Finance, Elsevier, vol. 18(4), pages 611-623, October.
    3. Michael C. Burda & Barbara Dluhosch, 2002. "Cost Competition, Fragmentation, and Globalization," Review of International Economics, Wiley Blackwell, vol. 10(3), pages 424-441, August.
    4. Paolo Guerrieri & Filippo Vergara Caffarelli, 2004. "International Fragmentation of Production and Euro-Med Integration," EUI-RSCAS Working Papers 28, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
    5. Welsch, Heinz, 2001. "The determinants of production-related carbon emissions in West Germany, 1985-1990: assessing the role of technology and trade," Structural Change and Economic Dynamics, Elsevier, vol. 12(4), pages 425-455, December.
    6. Wilfred J. Ethier, 2002. "Globalization, Globalisation," Tinbergen Institute Discussion Papers 02-088/2, Tinbergen Institute.
    7. Nicholas Sim, 2004. "International production sharing and economic development: moving up the value-chain for a small-open economy," Applied Economics Letters, Taylor & Francis Journals, vol. 11(14), pages 885-889.
    8. Hartmut Egger & Josef Falkinger, 2003. "The Role of Public Infrastructure for Firm Location and International Outsourcing," CESifo Working Paper Series 970, CESifo.
    9. Ethier, Wilfred J., 2005. "Globalization, globalisation: Trade, technology, and wages," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 237-258.

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    More about this item

    Keywords

    American Economic Review; Skilled Labour; Business Service; Wage Inequality; Unskilled Labour;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • 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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