Globalisation and Wage Inequality in the Canadian Manufacturing Sector: A Time Series Analysis
The deteriorating economic position of low-skilled workers relative to high-skilled workers appears to be one harmful effect of the economic globalisation that took place during the 1980s and 1990s. In the present paper, we survey the recent empirical literature on that topic and perform a time series investigation for Canada using as the dependent variable the relative wages of production and non-production workers in the manufacturing sector between 1971 and 1999. The independent variables include R&D, union density, immigration, imports from non-OECD countries, foreign direct investment, capital labour ratio, and number of workers in each group. The results show that the R&D expenditures and union density are two important variables in the explanation of the widening wage gap. The effects of immigration, imports, and FDI on wage inequality are found to be moderate.
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