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How Trade Hurt Unskilled Workers

In: International Trade and Labour Markets

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  • Adrian Wood

Abstract

This paper will argue for what is still a minority view among economists: that the main cause of the deteriorating situation of unskilled workers in developed countries has been expansion of trade with developing countries.1 This view was advanced in Wood (1991a, b), and later developed into a book (Wood, 1994), but much the same line is taken by Batra (1993) and by Learner (1993, 1994). It has been strongly attacked, however, by economists who think the effects of trade have been small — notably Lawrence and Slaughter (1993) and Krugman and Lawrence (1994). By way of a counterattack, this paper will outline the evidence which suggests that trade is the main cause of the problems of unskilled workers, respond to some criticisms of this evidence, and challenge the evidence for the alternative view that these problems are caused mainly by new technology. At the end, it will consider some of the implications of this debate for public policy.

Suggested Citation

  • Adrian Wood, 1997. "How Trade Hurt Unskilled Workers," Palgrave Macmillan Books, in: Jitendralal Borkakoti & Chris Milner (ed.), International Trade and Labour Markets, chapter 7, pages 140-168, Palgrave Macmillan.
  • Handle: RePEc:pal:palchp:978-1-349-14577-5_7
    DOI: 10.1007/978-1-349-14577-5_7
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    References listed on IDEAS

    as
    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    2. Alan B. Krueger, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984–1989," The Quarterly Journal of Economics, Oxford University Press, vol. 108(1), pages 33-60.
    3. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    4. Robert Z. Lawrence, 1994. "Trade, Multinationals, & Labor," NBER Working Papers 4836, National Bureau of Economic Research, Inc.
    5. Richard B. Freeman, 1994. "Working Under Different Rules," NBER Books, National Bureau of Economic Research, Inc, number free94-1, May.
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    More about this item

    Keywords

    Labour Market; Skilled Worker; Factor Content; Unskilled Worker; Wage Inequality;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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