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Trade and Rising Wage Inequality: What can we learn from a Decade of Computable General Equilibrium Analysis?

Author

Listed:
  • Niven Winchester

    () (Department of Economics, University of Otago)

Abstract

This paper surveys computable general equilibrium (CGE) contributions to trade-wage debate. We conclude that this literature provides an avalanche of support for the view that trade has had only a minor influence on wage inequality through Heckscher-Ohlin channels. Moreover, some studies show that trade may be associated with declining wage inequality and/or reveal that North-North trade is responsible for a greater proportion of the increase in Northern wage inequality than North-South trade. The impact of trade-induced technical change, however, has received little attention in the CGE literature.

Suggested Citation

  • Niven Winchester, 2006. "Trade and Rising Wage Inequality: What can we learn from a Decade of Computable General Equilibrium Analysis?," Working Papers 0606, University of Otago, Department of Economics, revised Oct 2006.
  • Handle: RePEc:otg:wpaper:0606
    as

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    File URL: http://www.business.otago.ac.nz/econ/research/discussionpapers/DP_0606.pdf
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Stephen Tokarick, 2005. "Quantifying the Impact of Trade on Wages: the Role of Nontraded Goods," Review of International Economics, Wiley Blackwell, vol. 13(5), pages 841-860, November.
    2. 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.
    3. Niven Winchester & David Greenaway & Geoffrey V. Reed, 2006. "Skill Classification and the Effects of Trade on Wage Inequality," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(2), pages 287-306, July.
    4. 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.
    5. Francois, Joseph F & Nelson, Douglas, 1998. "Trade, Technology, and Wages: General Equilibrium Mechanics," Economic Journal, Royal Economic Society, vol. 108(450), pages 1483-1499, September.
    6. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
    7. Thierfelder, Karen & Robinson, Sherman, 2002. "Trade and the skilled-unskilled wage gap in a model with differentiated goods," TMD discussion papers 96, International Food Policy Research Institute (IFPRI).
    8. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685.
    9. 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.
    10. 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.
    11. Olivier Bontout & Sébastien Jean, 2000. "What Drove Relative Wages in France? Structural Decomposition Analysis in a General Equilibrium Framework, 1970-1992," Working Papers 2000-03, CEPII research center.
    12. Abrego, Lisandro & Whalley, John, 2000. "The Choice of Structural Model in Trade-Wages Decompositions," Review of International Economics, Wiley Blackwell, vol. 8(3), pages 462-477, August.
    13. 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.
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    Cited by:

    1. Tyers, Rod, 2015. "International effects of China's rise and transition: Neoclassical and Keynesian perspectives," Journal of Asian Economics, Elsevier, vol. 37(C), pages 1-19.

    More about this item

    Keywords

    computable general equilibrium modeling; trade and wages;

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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