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Manufacturing skill-biased wage inequality, natural resources and institutions

  • Nuno Torres


    (CEF.UP and FEP, Universidade do Porto)

  • Óscar Afonso


    (CEF.UP and FEP, Universidade do Porto)

  • Isabel Soares


    (CEF.UP and FEP, Universidade do Porto)

We use an extensive dataset on occupational wages to measure the manufacturing skill premium and evaluate the importance of the main drivers in literature plus the effects of natural resources and institutions. Results, regarding a panel of 21 countries between 1987 and 2003, suggest the manufacturing skill premium of technologically advanced countries: (i) increases with tertiary enrolment, net FDI and the quality of governing institutions; (ii) decreases with the centralization of wage negotiations and the use of unskilled workers by geographically-diffuse natural resource re-exportation activities. In less advanced countries, the skill premium: (iii) augments with net FDI, scale effects, the centralization of wage negotiations, and scarcity of skilled workers absorbed by concentrated resource activities; (iv) decreases with trade, the use of unskilled workers by diffuse resource exploration, and the emergence of national low-end technological industrial sectors paying less for skilled labor than more advanced and predominant foreign-led industrial sectors.

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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series CEF.UP Working Papers with number 1303.

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Length: 28 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:por:cetedp:1303
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