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Dynamic Globalization and its Potentially Alarming Prospects for Low-Wage Workers

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  • Hans Fehr
  • Sabine Jokisch
  • Laurence J. Kotlikoff

Abstract

Will incomes of low and high skilled workers continue to diverge? Yes says our paper's dynamic, six-good, five-region - U.S., Europe, N.E. Asia (Japan, Korea, Taiwan, Hong Kong), China, and India -, general equilibrium, life-cycle model. The model predicts a near doubling of the ratio of high- to low-skilled wages over the century. Increasing wage inequality arises from a traditional source - a rising worldwide relative supply of unskilled labor, reflecting Chinese and Indian productivity improvements. But China's and India's education policies matter. If successive Chinese and Indian cohorts become more skilled, major exacerbation of inequality will be precluded.

Suggested Citation

  • Hans Fehr & Sabine Jokisch & Laurence J. Kotlikoff, 2009. "Dynamic Globalization and its Potentially Alarming Prospects for Low-Wage Workers," FIW Working Paper series 022, FIW.
  • Handle: RePEc:wsr:wpaper:y:2009:i:022
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    References listed on IDEAS

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    1. Robert C. Feenstra & Gordon H. Hanson, 1999. "The Impact of Outsourcing and High-Technology Capital on Wages: Estimates For the United States, 1979–1990," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 907-940.
    2. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
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    5. Robert Z. Lawrence, 2008. "Blue-Collar Blues: Is Trade to Blame for Rising US Income Inequality?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number pa85.
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    Citations

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    Cited by:

    1. Seth G. Benzell & Eugene Goryunov & Maria Kazakova & Laurence J. Kotlikoff & Guillermo LaGarda & Kristina Nesterova & Andrey Zubarev, 2015. "Simulating Russia’s and Other Large Economies’ Challenging and Interconnected Transitions," NBER Working Papers 21269, National Bureau of Economic Research, Inc.
    2. Laurence Kotlikoff, 2013. "The US Fiscal Cliff - When Economists Recklessly Endanger the Economy," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(2), pages 03-08, August.
    3. Robert Z. Lawrence, 2013. "Association of Southeast Asian Nations, People's Republic of China, and India Growth and the Rest of the World : The Role of Trade," Development Economics Working Papers 23409, East Asian Bureau of Economic Research.
    4. repec:eee:joecag:v:1-2:y:2013:i::p:35-49 is not listed on IDEAS
    5. Siliverstovs, Boriss & Kholodilin, Konstantin A. & Thiessen, Ulrich, 2011. "Does aging influence structural change? Evidence from panel data," Economic Systems, Elsevier, vol. 35(2), pages 244-260, June.
    6. Seth G. Benzell & Eugene Goryunov & Maria Kazakova & Guillermo Lagarda & Kristina Nesterova & Laurence J. Kotlikoff, "undated". "Simulating Russia’s and Other Large Economies’ Challenging and Interconnected Transitions," Boston University - Department of Economics - The Institute for Economic Development Working Papers Series dp-274, Boston University - Department of Economics.
    7. Hans Fehr & Sabine Jokisch & Ashwin Kambhampati & Laurence J. Kotlikoff, 2013. "Simulating the Elimination of the U.S. Corporate Income Tax," NBER Working Papers 19757, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Demographic transition; overlapping generations (OLG); computable general equilibrium models (CGE);

    JEL classification:

    • F0 - International Economics - - General
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • H0 - Public Economics - - General
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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