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Trade, technical change, and labour market adjustment

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Listed author(s):
  • Heitger, Bernhard
  • Stehn, Jürgen
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    Abstract

    The paper empirically examines three possible reasons for the high and rising unemployment of low-skilled employees in Germany: (i) an upsurge in interindustry trade, (ii) a skill-biased technical change, and (iii) a failure of labour market adjustment. The empirical analyses indicate that an exogenous wage-setting process as well as a bundle of factors, including a skill-biased technical and structural change, have contributed to the decline in relative demand for low-skilled employees in Germany. Thus, economic policy in Germany should focus on improving the employability of workers in the lower segment of the labour market and on raising the adjustment flexibility, above all the flexibility of the wage structure, of the German labour market.

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    File URL: https://www.econstor.eu/bitstream/10419/3101/1/Ste_Trade_Technical_Change.pdf
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    Paper provided by Kiel Institute for the World Economy (IfW) in its series Open Access Publications from Kiel Institute for the World Economy with number 3101.

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    Date of creation: 2003
    Handle: RePEc:zbw:ifwkie:3101
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    Keywords:

    Find related papers by JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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    1. Lawrence F. Katz & Kevin M. Murphy, 1992. "Changes in Relative Wages, 1963–1987: Supply and Demand Factors," The Quarterly Journal of Economics, Oxford University Press, vol. 107(1), pages 35-78.
    2. Mussa, Michael, 1974. "Tariffs and the Distribution of Income: The Importance of Factor Specificity, Substitutability, and Intensity in the Short and Long Run," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1191-1203, Nov.-Dec..
    3. Bernhard Heitger & Jürgen Stehn, 1990. "Japanese Direct Investments in the EC - Response to the Internal Market 1993?," Journal of Common Market Studies, Wiley Blackwell, vol. 29(1), pages 1-15, 09.
    4. Falk, Martin & Koebel, Bertrand M., 1997. "The Demand of Heterogeneous Labour in Germany," ZEW Discussion Papers 97-28, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    5. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
    6. Orszag, Mike & Snower, Dennis J., 1996. "A Macro Theory of Employment Vouchers," CEPR Discussion Papers 1367, C.E.P.R. Discussion Papers.
    7. Sachs, Jeffrey D & Shatz, Howard J, 1996. "U.S. Trade with Developing Countries and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 234-239, May.
    8. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    9. Snower, Dennis J, 1994. "Converting Unemployment Benefits into Employment Subsidies," American Economic Review, American Economic Association, vol. 84(2), pages 65-70, May.
    10. J. David Richardson, 1995. "Income Inequality and Trade: How to Think, What to Conclude," Journal of Economic Perspectives, American Economic Association, vol. 9(3), pages 33-55, Summer.
    11. George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 41-54, Spring.
    12. Leamer, Edward E, 1996. "Wage Inequality from International Competition and Technological Change: Theory and Country Experience," American Economic Review, American Economic Association, vol. 86(2), pages 309-314, May.
    13. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
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    Cited by:

    1. Harald Hagemann & Ralf Rukwid, 2007. "Perspectives of Workers with Low Qualifications in Germany under the Pressures of Globalization and Technical Progress," Diskussionspapiere aus dem Institut für Volkswirtschaftslehre der Universität Hohenheim 291/2007, Department of Economics, University of Hohenheim, Germany.
    2. Halit Yanikkaya, 2013. "Is trade liberalization a solution to the unemployment problem?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 12(1), pages 57-85, April.
    3. Rukwid, Ralf, 2007. "Arbeitslosigkeit und Lohnspreizung - Empirische Befunde zur Arbeitsmarktsituation gering Qualifizierter in Deutschland," Violette Reihe: Schriftenreihe des Promotionsschwerpunkts "Globalisierung und Beschäftigung" 24/2007, University of Hohenheim, Carl von Ossietzky University Oldenburg, Evangelisches Studienwerk.

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