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Trade, Technology and Labour Markets: Empirical Controversies in the Light of the Jones Model

  • Michael Pflüger
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    The deterioration of the income and employment position of unskilled workers in the OECD since the 1980s is a well-documented fact. The debate about the causes of this development is dominated by two competing hypotheses, "North-South Trade" ("globalisation") and technological progress. Several empirical methodologies have been used to identify and quantify the importance of these two explanations: factor content analyses, consistency checks, regression analyses and numerical methods. However, no consensus has been achieved so far and there is considerable methodological controversy. This paper uses Jones's (1965) exposition of the standard trade model as analytical backbone to identify and settle the sources of disagreement, to provide a synthesis of existing results, to derive new insights, and to provide a comprehensive assessment of the aforementioned empirical methodologies.

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    Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 328.

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    Length: 32 p.
    Date of creation: 2003
    Date of revision:
    Handle: RePEc:diw:diwwpp:dp328
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    1. Lisandro Abrego & John Whalley, 1999. "The Choice of Structural Model in Trade-Wages Decompositions," NBER Working Papers 7312, National Bureau of Economic Research, Inc.
    2. Neven, Damien J & Wyplosz, Charles, 1996. "Relative Prices, Trade and Restructuring in European Industry," CEPR Discussion Papers 1451, C.E.P.R. Discussion Papers.
    3. Robert E. Baldwin, 1999. "Inferring Relative Factor Price Changes from Quantitative Data," NBER Working Papers 7019, National Bureau of Economic Research, Inc.
    4. Robert E. Baldwin & Glen G. Cain, 1997. "Shifts in U.S. Relative Wages: The Role of Trade, Technology and Factor Endowments," NBER Working Papers 5934, National Bureau of Economic Research, Inc.
    5. Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
    6. Robert Z. Lawrence & Carolyn L. Evans, 1996. "Trade and Wages: Insights from the Crystal Ball," NBER Working Papers 5633, National Bureau of Economic Research, Inc.
    7. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
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