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Technology, Trade and Inequality

In recent decades new technology has led to increasing demand for well-educated labour at the expense of labour with lower education levels. Moreover, increased imports from low-cost countries have squeezed out many Norwegian manufacturing firms employing a sizeable share of workers with low education. In this article a large macroeconomic model for Norway (MODAG) is used to quantify the importance that technological developments and competition from low-cost countries have had for the economy and for low- and high-educated labour. The results show that above all technological developments, but also increased trade with low-cost countries, have reduced demand for low-educated labour relative to well-educated labour. Wage formation factors have however meant a) that technological developments have also benefited those with low education who still hold a job, and b) that a relative fall in prices on goods from poor parts of the world has kept down wage differentials.

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Paper provided by Statistics Norway, Research Department in its series Discussion Papers with number 364.

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Date of creation: Dec 2003
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Handle: RePEc:ssb:dispap:364
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  14. Kjell G. Salvanes & Svein Erik F¯rre, 2003. "Effects on Employment of Trade and Technical Change: Evidence from Norway," Economica, London School of Economics and Political Science, vol. 70(278), pages 293-329, 05.
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