Globalization, Technology, and the Skill Premium

Ariel Burstein · Jonathan Vogel

48 citations0/0 files stored

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Global trade and economics Labor market dynamics and wage inequality Economic Growth and Productivity

Abstract

We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in developed and developing countries. Our framework extends the Heckscher-Ohlin model by incorporating productivity di¤erences across producers within a sector, skill-biased technology (more e ¢ cient producers employ a relatively higher share of skilled workers), and MP. Reductions in trade and/or MP costs induce a re-allocation of resources both towards sectors that are intensive in a countrys abundant factor (generating a between e¤ect that increases the skill premium in skill-abundant countries and reduces it in skill-scarce countries) and within sectors towards more e ¢ cient producers that are more skill intensive (generating a within e¤ect that increases the skill premium in all countries). We study how the models parameters determine the strength of these e¤ects. Using a parameterized version of the model that matches salient features of U.S. data on trade and MP, we study the impact on the skill premium of changes in the extent of globalization (the shares of trade and MP in output) and in the composition of globalization (the relative importance of skill-abundant and skill-scarce countries in the global economy). Central to many of our results is the fact that the within e¤ect is stronger than the between e¤ect. In response to the three-fold increase in the extent of globalization in the U.S. over the last 40 years, the model generates an increase in the skill premium of 4 % to 6 % in the U.S. (or 1=6 to 1=4 of the rise of the college wage premium during this period) and 5 % in skill-scarce countries. We thank Francisco Alcalá, Chris Kurz, and Eric Verhoogen for help with their data. We are grateful to Arnaud

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 48 citations exist upstream.

References

1993Innovation and Growth in the Global Economy.1992Changes in Relative Wages, 1963-1987: Supply and Demand Factors 2002Technology, Geography, and Trade 1990Scale Economies, Product Differentiation, and the Pattern of Trade 2003Plants and Productivity in International Trade 2007Firms in International Trade 2006Globalization and the Gains From Variety 2008Trends in U.S. Wage Inequality: Revising the Revisionists

Cited by

2014GLOBALIZATION, TRADE, AND WAGES: WHAT DOES HISTORY TELL US ABOUT CHINA?2012Comparative advantage and the welfare impact of European integration 2011Local costs of distribution, international trade costs and micro evidence on the law of one price 2015Trade and Inequality 2016Globalization, Worker Mobility and Wage Inequality

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.