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12
Factor Prices and International Trade: A Unifying Perspective,”NBER Working Paper 16904
, 2011
"... How do trade liberalizations a¤ect relative factor prices and to what extent do they cause factors to reallocate across sectors? We …rst present a general accounting framework that nests a wide range of models that have been used to study the link between globalization and factor prices and from whi ..."
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Cited by 19 (3 self)
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How do trade liberalizations a¤ect relative factor prices and to what extent do they cause factors to reallocate across sectors? We …rst present a general accounting framework that nests a wide range of models that have been used to study the link between globalization and factor prices and from which we obtain two su ¢ cient statistics that determine factor prices. Under some restrictions, changes in the "factor content of trade " (FCT) fully determine the impact of trade on relative factor prices. We then study the determination of the FCT in a speci…c version of our general framework that uni…es traditional models of trade and factor prices featuring sectoral productivity and factor endowment di¤erences and new models featuring imperfect competition and heterogeneous producers. We show how heterogeneous …rms’decisions shape the FCT, and, therefore, the impact of trade liberalization on relative factor prices and between-sector factor allocation.
Trade between symmetric countries, heterogeneous firms, and the skill premium. Canadian Journal of Economics/Revue canadienne d’économique 44
, 2011
"... This paper examines the effects of trade liberalisation between symmetric countries on the skill wage premium. I use a model of monopolistic competition with heterogeneous firms and two factors of production: skilled and unskilled labour. I introduce a correlation between productivity and skill inte ..."
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Cited by 11 (0 self)
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This paper examines the effects of trade liberalisation between symmetric countries on the skill wage premium. I use a model of monopolistic competition with heterogeneous firms and two factors of production: skilled and unskilled labour. I introduce a correlation between productivity and skill intensity in the production process, which generates the empirically observed link between firm size, export status, wages and skill intensity. The entry and exit of firms following trade liberalisation has non-trivial effects on the demand for both types of labour, and therefore on their wages. I show that the impact of trade liberalisation on the skill premium depends on the type of trade costs considered, and on their initial size. While a decrease in the fixed costs of trade has a potentially non-monotonic effect, a drop in the variable trade costs yields an unambiguous and substantial increase in the skill premium. The calibration of the model to the U.S. economy shows that a reduction of the iceberg costs of trade from 1.5 to 1.1 can account for an increase in the skill premium of more than 10 percentage points, which is about a fourth of the observed rise in the 1980s and 1990s.
Imported Inputs and Skill Upgrading
- Labour Economics
"... This paper studies the e¤ect of imported inputs on relative skilled labor demand. To this pur-pose, it uses
rm-level data for 27 transition countries and propensity score matching techniques. The results show that importing inputs induces skill upgrading: according to a conservative es-timate, it e ..."
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Cited by 2 (0 self)
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This paper studies the e¤ect of imported inputs on relative skilled labor demand. To this pur-pose, it uses
rm-level data for 27 transition countries and propensity score matching techniques. The results show that importing inputs induces skill upgrading: according to a conservative es-timate, it explains roughly one-quarter of the higher share of skilled employment observed at importers. The paper discusses possible mechanisms behind this result. In particular, it reports suggestive evidence that importing may lead
rms to engage in skill-intensive activities, such as production of new goods, improvements in product quality and, to a lesser extent, R&D and technology adoption.
A Detailed Analysis of International Trade and Income Inequality in Developed Countries
, 2014
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Trade Policy, Economic Interests and Party Politics in a Developing Country: The Political Economy of CAFTA
"... Abstract Developing countries have increasingly opened their economies to trade. Research about trade policy in developed countries focuses on a bottom-up process by identifying economic preferences of domestic groups. We know less about developing countries. We analyze how economic and political v ..."
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Abstract Developing countries have increasingly opened their economies to trade. Research about trade policy in developed countries focuses on a bottom-up process by identifying economic preferences of domestic groups. We know less about developing countries. We analyze how economic and political variables influenced Costa Rican voters in a referendum on CAFTA, an international trade agreement. We find little support for Stolper-Samuelson models of economic preferences, but more support for specific factor models. We also isolate the effects of political parties on the referendum, controlling for many economic factors; we document how at least one party influenced voters and this made the difference for CAFTA passage. Politics, namely parties using their organizational strength to cue and frame messages for voters, influenced this important trade policy decision. Theories about trade policy need to take into account top-down political factors along with economic interests.
) 2003 The Review of Economic Studies Limited Patterns of Skill Premia
, 1998
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Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at
Skill Bias, Trade, and Wage Dispersion Ferdinando Monte
, 2009
"... Skill-biased technical change and trade integration have both been indicated to be the cause of the wide increase in wage inequality in U.S. in the last 50 years. This paper shows in a simple uni ed framework why both mechanisms can reproduce the observed pattern of wage dispersion. Intra- rm rent d ..."
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Skill-biased technical change and trade integration have both been indicated to be the cause of the wide increase in wage inequality in U.S. in the last 50 years. This paper shows in a simple uni ed framework why both mechanisms can reproduce the observed pattern of wage dispersion. Intra- rm rent distribution can be used to disentangle these causes. 1
Copyright © 2011 SciRes. ME A Note on Wage Inequality, Technology, and Trade
, 2011
"... Zeira (2007) presents a two-country model of endogenous technology and trade, illustrating that trade liber-alization reduces wage inequality in developing countries. The result contrasts the current outsourcing trade literature; the conflict is due to the critical assumption made in his model that ..."
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Zeira (2007) presents a two-country model of endogenous technology and trade, illustrating that trade liber-alization reduces wage inequality in developing countries. The result contrasts the current outsourcing trade literature; the conflict is due to the critical assumption made in his model that “the most rewarding technolo-gies are invested first. ” If we relax this assumption, or allow the technology frontier to foster labor gains in all existing industries, then Zeira’s model is, in fact, consistent with the current outsourcing trade literature.
Service O¤shoring and the Skill Composition of Labor Demand
, 2009
"... This paper studies the e¤ects of service o¤shoring on the skill composition of labor demand, using novel comparable data for nine Western European countries between 1990 and 2004. The empirical analysis delivers three main results. First, service o¤shoring is skill-biased, because it increases the d ..."
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This paper studies the e¤ects of service o¤shoring on the skill composition of labor demand, using novel comparable data for nine Western European countries between 1990 and 2004. The empirical analysis delivers three main results. First, service o¤shoring is skill-biased, because it increases the demand for high and medium skilled labor and decreases the demand for low skilled labor. Second, the e¤ects of service o¤shoring are similar to those of material o¤shoring, both qualitatively and quantitatively. Third, the economic magnitude of these e¤ects is not large. JEL codes: F1.
OFFSHORING, MULTINATIONALS AND LABOUR MARKET: A REVIEW OF THE EMPIRICAL LITERATURE
"... Abstract. This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries ’ labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to mak ..."
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Abstract. This paper reviews the empirical literature on the effects of offshoring and foreign activities of multinational enterprises on developed countries ’ labour markets. Results suggest that material offshoring worsens wage inequality between skilled and unskilled workers; it also seems to make employment more volatile, by raising the elasticity of labour demand and the risk of job losses. Service offshoring exerts at most small negative effects on total employment, and changes the composition of the workforce in favour of high-skilled white-collar employees. Multinationals tend to substitute domestic and foreign labour in response to changes in relative wages across countries; substitutability is weak, however, and mainly driven by horizontal, market-seeking foreign direct investments.
