Technology, Trade, and Wages
Considerable effort has been devoted in recent years to the description of wage structure. This research has documented a rising return to education, unobserved skill, and work experience, but there is little research into causes of the change in structure. This paper seeks to fill the gap by study- ing the impact of domestic technology, foreign technology and trade on U.S. wages. The standard model of general equilibrium presented shows that each effect tends to be opposite in sign for high and low skilled labor. We then modify the model to allow for accumulation of sector-specific skills and sec- toral immobility. In this version shocks have the same direction of effect on high and low skilled workers. In the empirical work we devise measures of foreign and domestic R&D inputs for 6 sectors of the private U.S. economy, and of R&D outputs for 24 manufacturing industries. Holding time and industry effects constant we find that in most cases technology has the same, not oppo- site effect on wages at both skill levels; a rise in the foreign share in world innovation or US patents decreases US wages; an increase in the US share in world innovation or US patents raises US wages, especially for the less skilled; and the stock of world innovation and US patents decreases real wages especially for the less skilled. Turning to the relative skilled wage, we find that the stock of world innovation or US patents increases the skill differen- tial. Holding technology constant we find mixed results for trade. Effects of trade on real wages are generally insignificant once time effects are taken into consideration. Our findings suggest that sectoral labor immobility is a factor in the interaction between the U.S. labor market, technology and trade technology is a key element in the twists of the wage structure, and in and of itself, trade may not be an important determinant of real wages.
|Date of creation:||Feb 1997|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Paul M Romer, 1999.
"Increasing Returns and Long-Run Growth,"
Levine's Working Paper Archive
2232, David K. Levine.
- repec:fth:harver:1473 is not listed on IDEAS
- Grossman, G.M. & Helpman, E., 1989.
"Quality Ladders And Product Cycles,"
39-89, Tel Aviv.
- Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders and Product Cycles," NBER Working Papers 3201, National Bureau of Economic Research, Inc.
- Grossman, G.M. & Helpman, E., 1989. "Quality Ladders And Product Cycles," Papers 152, Princeton, Woodrow Wilson School - Public and International Affairs.
- Zvi Griliches, 1998.
"Patent Statistics as Economic Indicators: A Survey,"
in: R&D and Productivity: The Econometric Evidence, pages 287-343
National Bureau of Economic Research, Inc.
- Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December.
- Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
- Ronald W. Jones, 1965. "The Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 73, pages 557-557.
- Adams, James D, 1990. "Fundamental Stocks of Knowledge and Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 98(4), pages 673-702, August.
- Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-266, April.
- Luis A. Rivera-Batiz & Paul M. Romer, 1991.
"Economic Integration and Endogenous Growth,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 106(2), pages 531-555.
- Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
- Kevin M. Murphy & Finis Welch, 1992. "The Structure of Wages," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 285-326.
- Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
- Robert Evenson, 1984. "International Invention: Implications for Technology Market Analysis," NBER Chapters, in: R&D, Patents, and Productivity, pages 89-126 National Bureau of Economic Research, Inc.
- Bartel, Ann P & Lichtenberg, Frank R, 1987. "The Comparative Advantage of Educated Workers in Implementing New Technology," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 1-11, February.
- Wolfgang F. Stolper & Paul A. Samuelson, 1941. "Protection and Real Wages," Review of Economic Studies, Oxford University Press, vol. 9(1), pages 58-73.
When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:5940. 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 references are entirely missing, you can add them using this form.