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Trade, Multinationals, & Labor

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  • Robert Z. Lawrence

Abstract

This paper summarizes and extends previous research on the relationship between low-wage international competition and wage performance in the Developed Countries in the 1980s. The first section argues that poor average US wage performance reflects slow domestic productivity growth rather than international competition. The second section presents evidence which rejects the view that Stolper-Samuelson effects are important in the US, Germany and Japan. In all three countries, neither the wholesale nor the import prices of unskilled-labor intensive products have experienced relative declines. At the same time, despite the rise in relative skilled worker wages, in the US, over the 1980s, the ratio of non-production to production workers grew faster than in the 1960s and 1970s; suggesting that technological change in US manufacturing was particularly biased in favor of white collar workers. The third section explores the employment and wage behavior in US multinational parents and their foreign-owned manufacturing affiliates between 1977 and 1989. Overall the data point to the dominant impact of a commonly shared technological change rather than trade and increased international sourcing. Employment fell, both in US parents and in affiliates in developed countries and grew only modestly" in developing countries. In foreign affiliates in both developed and developing countries, the relative compensation of non-production workers increased and the ratio of production to non-production workers fell. While US parent sourcing from overseas affiliates grew rapidly, the increase accounted for only a small share of sales.

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  • Robert Z. Lawrence, 1994. "Trade, Multinationals, & Labor," NBER Working Papers 4836, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4836
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    References listed on IDEAS

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    1. Steven J. Davis, 1992. "Cross-Country Patterns of Change in Relative Wages," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 239-300, National Bureau of Economic Research, Inc.
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    6. repec:fth:michin:323 is not listed on IDEAS
    7. Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," Review of Economic Studies, Oxford University Press, vol. 9(1), pages 58-73.
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    Cited by:

    1. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    2. Eckel, Carsten & Irlacher, Michael, 2017. "Multi-product offshoring," European Economic Review, Elsevier, vol. 94(C), pages 71-89.
    3. Nahuis, R., 1997. "On Globalisation, Trade and Wages," Other publications TiSEM f96f2ab3-c66f-438f-8a53-2, Tilburg University, School of Economics and Management.
    4. Pi, Jiancai & Zhou, Yu & Yin, Jun, 2013. "International factor mobility, monopolistic competition, and wage inequality," Economic Modelling, Elsevier, vol. 33(C), pages 326-332.
    5. Francis Kramarz, 2003. "Wages and International Trade," Working Papers 2003-27, Center for Research in Economics and Statistics.
    6. Pi, Jiancai & Zhou, Yu, 2013. "Institutional quality and skilled–unskilled wage inequality," Economic Modelling, Elsevier, vol. 35(C), pages 356-363.
    7. Neumayer, Eric & Soysa, Indra de, 2006. "Globalization and the Right to Free Association and Collective Bargaining: An Empirical Analysis," World Development, Elsevier, vol. 34(1), pages 31-49, January.
    8. Alessia Lo Turco & Aleksandra Parteka, 2011. "The demand for skills and labour costs in partner countries," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(3), pages 611-637, July.
    9. Henrik Braconier & Karolina Ekholm, 2000. "Swedish Multinationals and Competition from High‐ and Low‐Wage Locations," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 448-461, August.
    10. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, vol. 55(2), pages 379-390, December.
    11. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    12. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
    13. Michael Pflüger, 2001. "Trade, capital mobility, and the German labour market," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(3), pages 473-500, September.
    14. Li, Xiaochun & Zhou, Yu, 2013. "An economic analysis of remittance of unskilled migration on skilled–unskilled wage inequality in labor host region," Economic Modelling, Elsevier, vol. 33(C), pages 428-432.
    15. Gupta, Manash Ranjan & Dutta, Priya Brata, 2010. "Skilled-unskilled wage inequality: A general equilibrium analysis," Research in Economics, Elsevier, vol. 64(4), pages 247-263, December.
    16. Hing-Man Leung, 1998. "On wage-inequalities in the North and in the South," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(3), pages 299-315.
    17. Eric Neumayer & Indra de Soysa, 2004. "Globalization and the Right to Free Association and Collective," Labor and Demography 0410006, University Library of Munich, Germany, revised 22 Apr 2005.
    18. 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.
    19. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    20. Gupta, Manash Ranjan & Dutta, Priya Brata, 2010. "Skilled-unskilled wage inequality, nontraded good and endogenous supply of skilled labour: A theoretical analysis," Economic Modelling, Elsevier, vol. 27(5), pages 923-934, September.
    21. Santra, Sattwik, 2014. "Non-homothetic preferences: Explaining unidirectional movements in wage differentials," Journal of Development Economics, Elsevier, vol. 109(C), pages 87-97.
    22. Lars Calmfors & Giancarlo Corsetti & Michael P. Devereux & Gilles Saint-Paul & Hans-Werner Sinn & Jan-Egbert Sturm & Xavier Vives, 2008. "Chapter 3: The effect of globalisation on Western European jobs: curse or blessing?," EEAG Report on the European Economy, CESifo, vol. 0, pages 71-104, February.

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