A Labour-Based Theory of International Trade
This new model of international trade patterns is based on differing relative labor costs derived from differing endowments of skilled and unskilled labor, when labor is in elastic supply because of social support systems. All factors other than labor are assumed to be mobile across frontiers; constant returns to scale prevail. The model predicts that (1) high wage countries will export goods intensive in skilled labor (a hierarchy is proposed from 'expensive', skilled-labor-intensive, and often new products or services, all the way to 'cheap', unskilled-labor-intensive, often old products capable of mass manufacture); (2) wage equalization across borders for the same labor type can be frustrated by social support, notably for unskilled workers in high wage countries, who will be unemployed; (3) mercantilism has a pay-off in the form of lower unemployment. The theory is tested empirically in three ways. First, assuming unit value indices (uvis) are an index of 'expensiveness', country uvis are regressed on country wages for SITC 3-digit groups in textiles, machinery, and electrical apparatus. Second, country net exports in expensive and cheap labor commodity groups are regressed on country wages. Finally, country net exports are regressed on an index of skilled-labor-intensiveness for high-wage, low-wage and intermediate-wage countries.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
|Date of creation:||Mar 1988|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:237. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.