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Trade, technical change, and labour market adjustment

Author

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  • Heitger, Bernhard
  • Stehn, Jürgen

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.

Suggested Citation

  • Heitger, Bernhard & Stehn, Jürgen, 2003. "Trade, technical change, and labour market adjustment," Open Access Publications from Kiel Institute for the World Economy 3101, Kiel Institute for the World Economy (IfW).
    • Handle: RePEc:zbw:ifwkie:3101
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    File URL: https://www.econstor.eu/bitstream/10419/3101/1/Ste_Trade_Technical_Change.pdf
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    References listed on IDEAS

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    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.
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    Citations

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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.

    More about this item

    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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