Productivity Measurement and the Impact of Trade and Technology on Wages: Estimates for the U.S., 1972-1990
We develop an empirical framework to assess the importance of trade and technical change on the wages of production and nonproduction workers. Trade is measured by the foreign outsourcing of intermediate inputs, while technical change is measured by the shift towards high-technology capital such as computers. In our benchmark specification, we find that both foreign outsourcing and expenditures on high-technology equipment can explain a substantial amount of the increase in the wages of nonproduction (high-skilled) relative to production (low-skilled) workers that occurred during the 1980s. Surprisingly, it is expenditures on high-technology capital other than computers that are most important. These results are very sensitive, however, to our benchmark assumption that industry prices are independent of productivity. When we allow for the endogeneity of industry prices, then expenditures on computers becomes the most important cause of the increased wage inequality, and have a 50% greater impact than does foreign outsourcing.
|Date of creation:||Jun 1997|
|Date of revision:|
|Publication status:||published as (Published as "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates for the United States, 1979-1990") Quarterly Journal of Economics, Vol. 114 (1999): 907-940.|
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3419-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Berndt, Ernst R. & Morrison, Catherine J., 1995. "High-tech capital formation and economic performance in U.S. manufacturing industries An exploratory analysis," Journal of Econometrics, Elsevier, vol. 65(1), pages 9-43, January.
- Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
- Berndt, Ernst R. & Morrison, Catherine J. & Rosenblum, Larry S., 1992.
"High-tech capital formation and labor composition in U.S. manufacturing industries : an exploratory analysis,"
3414-92., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Ernst R. Berndt & Catherine J. Morrison & Larry S. Rosenblum, 1992. "High-Tech Capital Formation and Labor Composition in U.S. Manufacturing Industries: An Exploratory Analysis," NBER Working Papers 4010, National Bureau of Economic Research, Inc.
- Eric J. Bartelsman & Wayne Gray, 1996. "The NBER Manufacturing Productivity Database," NBER Technical Working Papers 0205, National Bureau of Economic Research, Inc.
- Baldwin, Robert E & Cain, Glen C, 1997.
"Shifts in US Relative Wages: The Role of Trade, Technology and Factor Endowments,"
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1596, C.E.P.R. Discussion Papers.
- 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.
- R. E. Baldwin & G. G. Cain, . "Shifts in U.S. Relative Wages: The Role of Trade, Technology, and Factor Endowments," Institute for Research on Poverty Discussion Papers 1132-97, University of Wisconsin Institute for Research on Poverty.
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