Trade Liberalisation, Technological Change and Skill-Specific Unemployment
DOI:
https://doi.org/10.1956/jge.v8i3.264Keywords:
trade, technology, heterogeneous firms, labour market frictionsAbstract
The aim of this paper is to formalise a two-country model of trade liberalisation and technological change with heterogeneous firms and search-and-matching frictions in the labour market. By considering different sectors and factors of production we allow for comparative advantages and study the trade and technology effects within and between sectors on wages and employment of skilled and low-skilled workers. Technological change together with inter-sectoral trade has distributional consequences across the labour force, favouring the skilled against the low-skilled workers. Intra-sectoral trade counteracts as it increases the demand for low-skilled workers, too. The overall effects on wages and employment of skilled and low-skilled workers depend on the extent of technological change, inter-sectoral trade and intra-sectoral trade.References
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Alcalá, F., Hernández, P. (2010): Firms' main market, human capital, and wages. Journal of the Spanish Economic Association 4(1):433-458.
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Aw, B., Roberts, M., Winston, T. (2007): The complementary role of exports and r&d investments as sources of productivity growth. The World Economy 30:83-104.
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Matsuyama, K. (2007): Beyond icebergs: Towards a theory of biased globalization. The Review of Economic Studies 74:237-253.
Melitz, M. (2003): The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71(6):1695-1725.
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Moore, M., Ranjan, P. (2005): Globalisation vs skill-biased technological change: Implications for unemployment and wage inequality. The Economic Journal 115:391-422.
Mortensen, D., Pissarides, C. (1994): Job creation and job destruction in the theory of unemployment. Review of Economic Studies 61(3):397-415.
Nelson, R., Phelps, E. (1966): Investment in humans, technological diffusion, and economic growth. American Economic Review 56:69-75.
Pissarides, C. (2000): Equilibrium Unemployment Theory, 2nd edn. Cambridge, MA: MIT Press.
Roberts, M., Tybout, J. (1997): The decision to export in colombia: An empirical model of entry with sunk costs. American Economic Review 87(4):545-564.
Schumpeter, J. (1942): Capitalism, Socialism, Democracy. Harper Perennial, New York.
Stole, L., Zwiebel, J. (1996): Intra-firm bargaining under non-binding contracts. Review of Economic Studies 63(3):375-410.
Stolper, W., Samuelson, P. (1941): Protection and real wages. Review of Economic Studies 9:58-73.
Vannoorenberghe, G. (2011): Trade between symmetric countries, heterogeneous firms, and the skill premium. Canadian Journal of Economics 44:148-170.
Verhoogen, E.A. (2008): Trade, quality upgrading, and wage inequality in the mexican manufacturing sector. The Quarterly Journal of Economics 123(2):489-530.
Yeaple, S. (2005): A simple model of firm heterogeneity, international trade, and wages. Journal of International Economics 65:1-20.
Zeira, J. (2007): Wage inequality, technology, and trade. Journal of Economic Theory 137(1):79-103.
Alcalá, F., Hernández, P. (2010): Firms' main market, human capital, and wages. Journal of the Spanish Economic Association 4(1):433-458.
Attanasio, O., Pinelopi, G., Pavcnik, N. (2004): Trade reforms and wage inequality in columbia. Journal of Development Economics 74(2):331-366.
Aw, B., Roberts, M., Winston, T. (2007): The complementary role of exports and r&d investments as sources of productivity growth. The World Economy 30:83-104.
Bartelsman, E., Doms, M. (2000): Understanding productivity: Lessons from longitudinal microdata. Journal of Economic Literature 38(3):569-594.
Bernard, A., Jensen, J. (1995): Exports, jobs, and wages in us manufacturing: 1976-87. Brookings Papers on Economic Activity: Microeconomics pp. 67-112.
Bernard, A., Jensen, J. (1999): Exceptional exporter performance: Cause, effect, or both? Journal of International Economics 47(1):1-25.
Bernard, A., Jensen, J. (2004a): Entry, expansion and intensity in the u.s. export boom, 1987-1992. Review of International Economics 12:662-675.
Bernard, A., Jensen, J. (2004b): Why some firms export. Review of Economics and Statistics 86(2):561-569.
Bernard, A., Jensen, J., Schott, P. (2006): Survival of the best fit: Exposure to low-wage countries and the (uneven) growth of u.s. manufacturing plants. Journal of International Economics 68:219-237.
Bernard, A., Redding, S., Schott, P. (2007): Comparative advantage and heterogeneous firms. Review of Economic Studies 74(1):31-66.
Burstein, A., Vogel, J. (2010): Globalization, technology, and the skill premium: A quantitative analysis. NBER Working Paper 16459.
Bustos, P. (2011): The impact of trade liberalization on skill upgrading evidence from argentina. Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra.
Clerides, S., Lach, S., Tybout, J. (1998): Is learning by exporting important? Microdynamic evidence from columbia, mexico, and morocco. Quarterly Journal of Economics 113(3):903-947.
Costinot, A., Vogel, J. (2010): Matching and inequality in the world economy. Journal of Political Economy 118(4):747-786.
Davis, D. (1998): Does european unemployment prop up american wages? national labour markets and global trade. American Economic Review 88:478-494.
Davis, S., Haltiwanger, J. (1992): Gross job creation, gross job destruction, and employment reallocation. Quarterly Journal of Economics 107(3):819-863.
Dunne, T., Roberts, M., Samuelson, L. (1989): The growth and failure of u.s. manufacturing plants. Quarterly Journal of Economics 104(4):671-698.
Dutt, P., Mitra, D., Ranjan, P. (2009): International trade and unemployment: Theory and cross-national evidence. Journal of International Economics 78(1):32-44.
Felbermayr, G., Prat, J. (2011): Product market regulation, firm selection and unemployment. Journal of the European Economic Association 9:278-317.
Felbermayr, G., Prat, J., Schmerer, H. (2011): Globalization and labor market outcomes: Wage bargaining, search frictions, and firm heterogeneity. Journal of Economic Theory 146(1):39-73.
Greenaway, D., Kneller, R. (2007): Firm heterogeneity, exporting and foreign direct investment. The Economic Journal 117:F134-F161.
Griliches, Z. (1969): Capital-skill complementarity. Review of Economics and Statistics 5:465{468.
Helpman, E., Itskhoki, O., Redding, S. (2010): Inequality and unemployment in a global economy. Econometrica 78(4):1239-1283.
Larch, M., Lechthaler, W. (2011): Comparative advantage and skill-specific unemployment. The BE Journal of Economic Analysis and Policy 11(1)((Contributions), Article 23).
Levinsohn, J. (1999): Employment responses to international liberalization in chile. Journal of International Economics 47(2):321-344.
López, R. (2004): Self-selection into the export markets: a conscious decision? Department of Economics, Indiana University.
Matsuyama, K. (2007): Beyond icebergs: Towards a theory of biased globalization. The Review of Economic Studies 74:237-253.
Melitz, M. (2003): The impact of trade on intra-industry reallocations and aggregate industry productivity. Econometrica 71(6):1695-1725.
Molina, D., Muendler, M. (2009): Preparing to export. Mimeo University of California, San Diego.
Moore, M., Ranjan, P. (2005): Globalisation vs skill-biased technological change: Implications for unemployment and wage inequality. The Economic Journal 115:391-422.
Mortensen, D., Pissarides, C. (1994): Job creation and job destruction in the theory of unemployment. Review of Economic Studies 61(3):397-415.
Nelson, R., Phelps, E. (1966): Investment in humans, technological diffusion, and economic growth. American Economic Review 56:69-75.
Pissarides, C. (2000): Equilibrium Unemployment Theory, 2nd edn. Cambridge, MA: MIT Press.
Roberts, M., Tybout, J. (1997): The decision to export in colombia: An empirical model of entry with sunk costs. American Economic Review 87(4):545-564.
Schumpeter, J. (1942): Capitalism, Socialism, Democracy. Harper Perennial, New York.
Stole, L., Zwiebel, J. (1996): Intra-firm bargaining under non-binding contracts. Review of Economic Studies 63(3):375-410.
Stolper, W., Samuelson, P. (1941): Protection and real wages. Review of Economic Studies 9:58-73.
Vannoorenberghe, G. (2011): Trade between symmetric countries, heterogeneous firms, and the skill premium. Canadian Journal of Economics 44:148-170.
Verhoogen, E.A. (2008): Trade, quality upgrading, and wage inequality in the mexican manufacturing sector. The Quarterly Journal of Economics 123(2):489-530.
Yeaple, S. (2005): A simple model of firm heterogeneity, international trade, and wages. Journal of International Economics 65:1-20.
Zeira, J. (2007): Wage inequality, technology, and trade. Journal of Economic Theory 137(1):79-103.
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Published
01.12.2012
How to Cite
Engelmann, S. (2012) “Trade Liberalisation, Technological Change and Skill-Specific Unemployment”, Journal of Global Economy, 8(3), pp. 197–224. doi: 10.1956/jge.v8i3.264.
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