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The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France

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  • Vanessa Strauss-Kahn

Abstract

Growth in international trade and globalization has been correlated in nearly all countries with a worsening of the less skilled labor situation relative to the skilled. In this empirical paper, I show that an important component of recent globalization in France has been a huge growth in vertical specialization -- the completion of the different production stages of a good in different countries. By shifting relative labor demand across countries, globalization of this form could explain the poor relative showing of unskilled labor in industrial countries. Using input-output tables and labor data, I find that in France vertical specialization -- defined as the share of imported inputs in production -- rose from 9% in 1977 to 14% in 1993. Further estimations show that vertical specialization contributed from 11% to 15% of the decline in the share of unskilled workers in French manufacturing employment for the 1977-1985 period and for 25% of the decline in the 1985-1993 period.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9716.

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Date of creation: May 2003
Publication status: published as Baldwin, Robert E. and L. Alan Winters (eds.) Challenges to globalization: Analyzing the economics NBER Economic Research Conference Report series. Chicago and London: University of Chicago Press, 2004.
Handle: RePEc:nbr:nberwo:9716
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  • F15 - International Economics - - Trade - - - Economic Integration
  • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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  1. Jose Manuel Campa & Linda S. Goldberg, 1997. "The evolving external orientation of manufacturing: a profile of four countries," Economic Policy Review, Federal Reserve Bank of New York, issue Jul, pages 53-81.
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  12. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
  13. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
  14. 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.
  15. Strauss-Kahn, Vanessa, 2005. "Firms' location decision across asymmetric countries and employment inequality," European Economic Review, Elsevier, vol. 49(2), pages 299-320, February.
  16. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
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