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415
The Impact Of Outsourcing And High-Technology Capital On Wages: Estimates For The United States, 1979-1990
, 1998
"... We estimate the relative influence of trade versus technology on wages in a "large country" setting, where technological change affects product prices. Trade is measured by the foreign outsourcing of intermediate inputs, while technological change is measured by expenditures on high-techno ..."
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Cited by 495 (19 self)
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We estimate the relative influence of trade versus technology on wages in a "large country" setting, where technological change affects product prices. Trade is measured by the foreign outsourcing of intermediate inputs, while technological change is measured by expenditures on high-technology capital such as computers. In our initial specification, we find that computers explain about 35 percent of the increase in the relative wage of nonproduction workers, while outsourcing explains at most 15 percent. In an alternative specification, outsourcing explains about 40 percent of the increase in the relative nonproduction wage, whereas computer expenditures can explain 75 percent of this increase.
The Nature and Growth of Vertical Specialization in World Trade
- Journal of International Economics
"... Abstract: Dramatic changes are occurring in the nature of international trade. Production processes increasingly involve a sequential, vertical trading chain stretching across many countries, with each country specializing in particular stages of a good’s production sequence. We document a key aspe ..."
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Cited by 481 (20 self)
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Abstract: Dramatic changes are occurring in the nature of international trade. Production processes increasingly involve a sequential, vertical trading chain stretching across many countries, with each country specializing in particular stages of a good’s production sequence. We document a key aspect of these vertical linkages – the use of imported inputs in producing goods that are exported – which we call vertical specialization. Using input-output tables from the OECD and emerging market countries we estimate that vertical specialization accounts for up to 30 % of world exports, and has grown as much as 40 % in the last twenty-five years. The key insight about why vertical specialization has grown so much lies with the fact that trade barriers (tariffs and transportation costs) are incurred repeatedly as goods-in-process cross multiple borders. Hence, even small reductions in tariffs and transport costs can lead to extensive vertical specialization, large trade growth, and large gains from trade. We formally illustrate these points by developing an extension of the Dornbusch-Fischer-Samuelson Ricardian trade model.
Who gains from trade reform? Some remaining puzzles
, 1999
"... This paper focuses on three unresolved issues with regard to the impact of trade reform. First, many studies linking trade reform to long run growth are surprisingly fragile. To illustrate the problems with this literature, we examine a popular measure of openness w recently introduced by Sachs and ..."
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Cited by 208 (4 self)
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This paper focuses on three unresolved issues with regard to the impact of trade reform. First, many studies linking trade reform to long run growth are surprisingly fragile. To illustrate the problems with this literature, we examine a popular measure of openness w recently introduced by Sachs and Warner Sachs, J., Warner, A., 1995. Economic reform and the process of global integration. Brookings Papers on Economics Activity 1, pp. x 1--117 . We show that their measure fails to establish a robust link between more open trade policies and long run growth. The second puzzle we identify is the small impact of trade reform on employment in developing countries. Finally, we analyze evidence on the relationship between trade reform and rising wage inequality, focusing on the 1985 Mexican trade reform. Wage inequality in Mexico rose after the reform, which is puzzling in a Heckscher--Ohlin context if Mexico has a comparative advantage in producing low skill-intensive goods. q 1999 Elsevier S...
What Has Happened to Wages in Mexico Since NAFTA? Implications for Hemispheric Free Trade. National Bureau of Economic Research Working Paper 9563
, 2003
"... Abstract. In this paper, I examine the impacts of trade and investment liberalization on the wage structure of Mexico. Part one of the paper surveys recent literature on the labor-market consequences of Mexico’s economic reforms in the 1980’s. Mexico’s policy reforms appear to have raised the demand ..."
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Cited by 82 (2 self)
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Abstract. In this paper, I examine the impacts of trade and investment liberalization on the wage structure of Mexico. Part one of the paper surveys recent literature on the labor-market consequences of Mexico’s economic reforms in the 1980’s. Mexico’s policy reforms appear to have raised the demand for skill in the country, reduced rents in industries that prior to reform paid their workers high wages, and raised the premium paid to workers in states along the U.S. border. These changes have resulted in an increase in wage dispersion in the country. Part two of the paper examines changes in Mexico’s wage structure during the 1990’s. In the last decade, Mexico has experienced rising returns to skill, which mirror closely wage movements in the United States. There is, however, little evidence of wage convergence between the two countries. Regional wage differentials in Mexico have widened and appear to be explained largely by variation in regional access to foreign trade and investment and in regional opportunities for migration to the United States. I discuss implications of Mexico’s experience for the rest of Latin America in the event a Free Trade Agreement of the Americas is enacted.
Economic Insecurity and the Globalization of Production
- American Journal of Political Science
"... A common claim in debates about globalization is that economic integration increases worker insecurity. Although this idea is central to both political and academic debates about international economic integration, the theoretical basis of the claim is often not clear. There is also no empirical res ..."
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Cited by 76 (5 self)
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A common claim in debates about globalization is that economic integration increases worker insecurity. Although this idea is central to both political and academic debates about international economic integration, the theoretical basis of the claim is often not clear. There is also no empirical research that has directly tested the relationship. In this paper, we argue that economic insecurity among workers may be related to deteriorating employment and/or wage interactions with employers, and that foreign direct investment may a key factor contributing to this deterioration. We present new empirical evidence, based on the analysis of panel data from Great Britain collected from 1991-1999, that FDI activity in the industries in which individuals work is positively correlated with individual perceptions of economic insecurity. This relationship holds in yearly cross-sections, in a panel accounting for individual-specific effects, and in a dynamic panel model also accounting for individual-specific effects.
International Outsourcing and Factor Prices with Multistage Production
- ECONOMIC JOURNAL
, 2004
"... We develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages. We then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin fragmentation. Using this frontier in a 2×2 general ..."
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Cited by 76 (4 self)
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We develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages. We then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin fragmentation. Using this frontier in a 2×2 general equilibrium model, we investigate the role of outsourcing in the adjustment to a decline in the final output price of the multistage industry, and the attendant factor price effects. We also explore the implications of an improved technology of international fragmentation on the margin of fragmentation and on domestic factor prices.
The Impact of Trade on Technology and Skill Upgrading Evidence from Argentina’, University Pompeu Fabra mimeo
, 2007
"... In the last 20 years, wage inequality has increased in many developing countries. Most research on this topic focuses on two possible causes: trade or skill-biased technical change. Several empirical studies document increases in skill intensity within all sectors, favoring the technological change ..."
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Cited by 69 (1 self)
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In the last 20 years, wage inequality has increased in many developing countries. Most research on this topic focuses on two possible causes: trade or skill-biased technical change. Several empirical studies document increases in skill intensity within all sectors, favoring the technological change explanation over trade. Instead, I present and test a model where trade and capital account liberalization increase the profitability of skill-biased new technologies in all sectors, but there is cross-firm heterogeneity in technology adoption due to differences in productivity, fixed costs of adoption and credit constraints. Liberalization drives the adoption of new technologies in developing countries by increasing market size, eliminating restrictions on technology transfers and reducing interest rates. Only the most productive firms enter export markets, and thus make enough profits to cover the fixed cost of technology adoption. Foreign-owned firms are less subject to credit constraints, and hence are also more likely to be able to finance investment in technology. The model predicts that the level of technology spending and skill intensity after liberalization is discretely higher for exporters and foreign-owned firms; and the change in technology spending and skill upgrading has an inverted U shape, being highest for firms in the middle range of the productivity distribution, such as new entrants in the export market. I test these theoretical predictions in
Emigration and wages in source countries: Evidence from Mexico
- Journal of Development Economics
, 2007
"... Abstract This paper examines empirically the effect of Mexican emigration to the United States on wages in Mexico using data from the Mexican and US censuses from 1970 to 2000. The main result in the paper is that emigration has a strong and positive effect on Mexican wages. There is also evidence ..."
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Cited by 64 (0 self)
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Abstract This paper examines empirically the effect of Mexican emigration to the United States on wages in Mexico using data from the Mexican and US censuses from 1970 to 2000. The main result in the paper is that emigration has a strong and positive effect on Mexican wages. There is also evidence for increasing wage inequality in Mexico due to emigration. Simple welfare calculations based on a labor demand-supply framework suggest that the aggregate welfare loss to Mexico due to emigration is small. However, there is a significant distributional impact between labor and other factors. D
Factor Immobility and Regional Impacts of Trade Liberalization: Evidence on Poverty and Inequality from India” (unpublished
- Institute of Technology). Available via the Internet: http://www.isid.ac.in/~planning/ Topalova.pdf
, 2005
"... Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by external factors, to measure the causal impact of trade liberal ..."
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Cited by 63 (6 self)
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Although it is commonly believed that trade liberalization results in higher GDP, little is known about its effects on poverty and inequality. This paper uses the sharp trade liberalization in India in 1991, spurred to a large extent by external factors, to measure the causal impact of trade liberalization on poverty and inequality in districts in India. Variation in preliberalization industrial composition across districts in India and the variation in the degree of liberalization across industries allow for a difference-in-difference approach, establishing whether certain areas benefited more from, or bore a disproportionate share of the burden of liberalization. In rural districts where industries more exposed to liberalization were concentrated, poverty incidence and depth decreased by less as a result of trade liberalization, a setback of about 15 percent of India’s progress in poverty reduction over the 1990s. The results are robust to pre-reform trends, convergence and time-varying effects of initial district-specific characteristics. Inequality was unaffected in the sample of all Indian states in both urban and rural areas. The findings are related to the extremely limited mobility of factors across regions and industries in India. Indeed, in Indian states where inflexible labor laws impeded factor reallocation, the adverse impact of liberalization on poverty was more pronounced. The findings, consistent with a specific factors model of trade, suggest that to minimize the social costs of inequality, additional policies may be needed to redistribute some of the gains of liberalization from winners to those who do not benefit as much. Creating a flexible institutional environment will likely minimize the need for additional interventions. 1
Relative prices and wage inequality: evidences from Mexico”,
- in Journal of International Economic,
, 2004
"... Although over 100 recent papers analyze the relationship between globalization and wage inequality, the theoretical and empirical link between them remains contested. Starting with the Stolper -Samuelson theorem, a standard result in trade theory that links changes in goods prices and changes in re ..."
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Cited by 62 (4 self)
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Although over 100 recent papers analyze the relationship between globalization and wage inequality, the theoretical and empirical link between them remains contested. Starting with the Stolper -Samuelson theorem, a standard result in trade theory that links changes in goods prices and changes in relative factor prices, this paper considers two issues that arise in the trade and wages debate. The first issue is whether changes in relative prices can explain changes in relative wages and whether changes in tariffs and trade policy explain movements in relative prices. The second is when changes in relative prices affect relative wages. To examine these two questions, this paper examines Mexico's trade liberalization. Revisiting the Mexican case is important for two reasons. Studying the Mexican case may 0022-1996/$ -see front matter D
