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Can Trade Explain the Sector Bias of Skill-biased Technical Change?

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  • Robert Stehrer

    () (The Vienna Institute for International Economic Studies, wiiw)

Abstract

There is evidence that the skilled to unskilled wage rates were rising in the 1980s and at the beginning of the 1990s. This can potentially be explained by a Heckscher-Ohlin framework where economic integration implies that the advanced countries specialize in skilled-labour-intensive industries and developing countries in unskilled-labour-intensive industries. However, actual trade figures show that import penetration was particularly high in the skill-intensive industry segments also for trade integration with developing economies, which would imply a falling relative wage rate of skilled workers in the advanced countries in the Heckscher-Ohlin framework. If, however, these trade patterns induce relatively stronger skill-biased technical progress in the skill-intensive sectors, then the effect of trade would again be a potential reason for the widening of the wage differential between skilled and unskilled workers in the advanced countries. This paper presents some evidence that (negative) employment effects or positive productivity effects due to trade integration are particularly strong in the skill-intensive industries which supports the hypothesis above.

Suggested Citation

  • Robert Stehrer, 2004. "Can Trade Explain the Sector Bias of Skill-biased Technical Change?," wiiw Working Papers 30, The Vienna Institute for International Economic Studies, wiiw.
  • Handle: RePEc:wii:wpaper:30
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    References listed on IDEAS

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    Cited by:

    1. Nursel AYDINER-AVSAR & Özlem ONARAN, 2010. "The Determinants Of Employment: A Sectoral Analysis For Turkey," The Developing Economies, Institute of Developing Economies, vol. 48(2), pages 203-231.
    2. Özlem Onaran, 2008. "Jobless Growth in the Central and Eastern European Countries," Working Papers wp165, Political Economy Research Institute, University of Massachusetts at Amherst.
    3. Özlem Onaran, 2008. "The effect of import penetration on labor market outcomes in Austrian manufacturing industry," Department of Economics Working Papers wuwp119, Vienna University of Economics and Business, Department of Economics.
    4. Onaran, Özlem, 2007. "Jobless growth in the Central and Eastern European Countries. A country specific panel data analysis for the manufacturing industry," Department of Economics Working Paper Series 372, WU Vienna University of Economics and Business.
    5. Özlem Onaran, 2007. "The effects of globalization on income distribution," Working Paper Reihe der AK Wien - Materialien zu Wirtschaft und Gesellschaft 100, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik.

    More about this item

    Keywords

    skill-biased technical change; technology; trade and labour markets;

    JEL classification:

    • F1 - International Economics - - Trade
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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