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Technology, Trade, and Increasing Inequality: Does the Cause Matter for the Cure?

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  • Deardorff, A.V.

Abstract

This paper addresses an issue that has received a great deal of attention in recent years, both from international trade economists and from labor economists: What has caused the relative wage of skilled labor compared to unskilled labor in the United States to increase through the 1980s and 1990s? Prime candidates for causing this change have been "trade" - the increased competition of U.S. workers with unskilled workers abroad - and "technology" - new products and processes that may have increased the productivity of skilled workers or skill-intensive industries relative to their unskilled counterparts. The paper reviews what has happened to relative wages and the explanations that have been suggested. A brief look at the empirical evidence from this literature is suggestive, but hardly conclusive. But the paper then asks whether the answer to this question really matters.

Suggested Citation

  • Deardorff, A.V., 1998. "Technology, Trade, and Increasing Inequality: Does the Cause Matter for the Cure?," Working Papers 428, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:428
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    Cited by:

    1. Michel Dumont, 2006. "Foreign outsourcing, labour demand and the choice of functional form," Journal of Applied Economics, Universidad del CEMA, vol. 9, pages 255-273, November.
    2. Meschi, Elena & Taymaz, Erol & Vivarelli, Marco, 2011. "Trade, technology and skills: Evidence from Turkish microdata," Labour Economics, Elsevier, vol. 18(S1), pages 60-70.
    3. Anuradha Roy & Ricardo Leiva, "undated". "Testing of a Structures Covariance Matrix for Three-Level Repeated Measures Data," Working Papers 0037, College of Business, University of Texas at San Antonio.
    4. Naoko Shinkai, 2000. "Does the Stopler-Samuelson Theorem Explain the Movement in Wages? The Linkage Between Trade and Wages in Latin American Countries," Research Department Publications 4237, Inter-American Development Bank, Research Department.
    5. 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," MPRA Paper 83525, University Library of Munich, Germany.
    6. Naoko Shinkai, 2000. "¿Explica el teorema Stopler-Samuelson el desplazamiento de los salarios? El vínculo entre el comercio internacional y los salarios en países latinoamericanos," Research Department Publications 4238, Inter-American Development Bank, Research Department.
    7. Jonathan E. Haskel, 1999. "The Trade and Labour Approaches to Wage Inequality," Working Papers 405, Queen Mary University of London, School of Economics and Finance.

    More about this item

    Keywords

    TRADE ; WAGES;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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