Trade, Skill Biased Technical Change and Wage Inequality in S outh A frica

Jørn Rattsø · Hildegunn Ekroll Stokke

9 citations0/0 files storedReview of International Economics

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Global trade and economics Labor market dynamics and wage inequality Economic Theory and Policy

Abstract

Abstract Trade openness influences the wage structure via technology adoption in middle income countries. Given the econometric challenges of handling endogenous trade and technology interaction, we offer an alternative quantification based on calibration of a general equilibrium model. We expand the standard open economy Ramsey model to include comparative advantage, technology adoption and skill bias influenced by investment decisions. The calibration constructs a reference path for South Africa and allows counterfactual analysis of trade openness. The quantitative results imply that trade effects via technology adoption and skill bias can be an important determinant of wage inequality in middle income countries.

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References

2004International Technology Diffusion 1998Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality 20061 Distributional Effects of Globalization in Developing Countries*2004Trade and Productivity 2006The World Technology Frontier 2003Patterns of Skill Premia 2004Trade reforms and wage inequality in Colombia 2008World Development Indicators 2008

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2017Skill-biased technological change and wage inequality in developing countries

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