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Searching for the Smoking Gun: Did Trade Hurt Unskilled Workers?

Author

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  • Niven Winchester

    () (Department of Economics, University of Otago)

Abstract

We contribute to the trade-wage literature by conducting the first economy-wide analysis of the association between trade and wages in New Zealand. We find that increased imports since 1980 caused only a marginal increase in New Zealand wage inequality and, overall, increased trade (imports and exports) reduced wage inequality in this nation. As New Zealand imports of unskilled labour-intensive products relative to GDP are larger than those for other developed nations, we interpret these results as convincing evidence that trade is not responsible for rising wage inequality in developed nations.

Suggested Citation

  • Niven Winchester, 2006. "Searching for the Smoking Gun: Did Trade Hurt Unskilled Workers?," Working Papers 0605, University of Otago, Department of Economics, revised Sep 2006.
  • Handle: RePEc:otg:wpaper:0605
    as

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0605.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Haskel, Jonathan & Slaughter, Matthew J, 2001. "Trade, Technology and U.K. Wage Inequality," Economic Journal, Royal Economic Society, vol. 111(468), pages 163-187, January.
    2. Hertel, Thomas & Hummels, David & Ivanic, Maros & Keeney, Roman, 2007. "How confident can we be of CGE-based assessments of Free Trade Agreements?," Economic Modelling, Elsevier, vol. 24(4), pages 611-635, July.
    3. Jeffrey D. Sachs & Howard J. Shatz, 1994. "Trade and Jobs in Manufacturing," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 1-84.
    4. Lisandro Abrego & John Whalley, 2003. "Goods market responses to trade shocks and trade and wages decompositions," Canadian Journal of Economics, Canadian Economics Association, vol. 36(3), pages 747-757, August.
    5. Roberto A. De Santis, 2003. "Wage Inequality in the United Kingdom: Trade and/or Technology?," The World Economy, Wiley Blackwell, vol. 26(6), pages 893-909, June.
    6. De Santis, Roberto A., 2002. "Wage inequality between and within groups: trade-induced or skill-bias technical change? Alternative age models for the UK," Economic Modelling, Elsevier, vol. 19(5), pages 725-746, November.
    7. Dean Hyslop & Dave Mare & Jason Timmins, 2003. "Qualifications, Employment and the Value of Human Capital, 1986-2001," Treasury Working Paper Series 03/35, New Zealand Treasury.
    8. Tyers, R. & Yang, Y., 1996. "Trade with Asia and Skill Upgrading: Effects on Factor Markets in the Older Industrial Countries," CEPR Discussion Papers 346, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    9. Robert Z. Lawrence & Carolyn L. Evans, 1996. "Trade and Wages: Insights from the Crystal Ball," NBER Working Papers 5633, National Bureau of Economic Research, Inc.
    10. Damien NEVEN. & Charles WYPLOSZ, 1996. "Relative Prices, Trade and Restructuring in European Industry," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9615, Université de Lausanne, Faculté des HEC, DEEP.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    trade and wages; skill classification;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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