Shifts in Relative U.S. Wages: The Role of Trade, Technology, and Factor Endowments

Baldwin, Richard; Cain, Glen G.

doi:10.1162/003465300559064

Cited by 116 publications

(107 citation statements)

References 7 publications

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“…Thus she concludes that the magnitude of product price increases and wage changes for skilled and unskilled workers are roughly comparable. Baldwin and Cain (2000) find that both international trade and technological progress have contributed to increased wage inequality during the 1980s and 1990s. In contrast, Lawrence and Slaughter (1993) find no clear evidence that the raising of the relative price for skilled-labor-intensive products has caused increasing US wage inequality.…”

Section: Related Literaturementioning

confidence: 94%

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

Konings

Murphy

2001

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Non-Technical SummaryThe increased globalization of the world economy has stirred the fear that domestic employment will be relocated to the lower wage countries. The signing of the NAFTA agreements in the US and the liberalization of the economies in Central and Eastern Europe, which resulted in the Association Agreements with the EU, have contributed to this fear. This has driven an ongoing debate about the role of international trade in contributing to labor market distortions. However, there is still no consensus about the extent to which globalization has mattered in affecting the demand for home jobs.One of the most obvious channels through which home jobs may be affected is the employment allocation of multinational enterprises (MNEs). However, For firms operating in the service sectors we find no evidence of employment relocation, while for firms that operate in the wholesale sectors (distribution) we find relocation to the lower wage subsidiaries in Central and Eastern Europe.The results of this paper suggest that foreign direct investment in Central and Eastern Europe is mainly taking place to obtain market access and to achieve a strategic position in the emerging markets, rather than to exploit cheap labour costs.In contrast, foreign direct investment within the EU seems to be driven by labour cost We investigate whether employment in the MNEs' subsidiaries are substitutes for home employment or in other words we investigate whether European MNEs can easily relocate employment between the parent and their daughter(s).Our main findings can be summarized as follows: (i) We find evidence for substitution effects between parent and foreign employment. A decline of 10% in MNE affiliate's wage costs is associated with a decline in parent employment of between 1.5% and 2% on average. (ii) This effect is mainly driven by firms that operate in the manufacturing sector. Moreover, the substitution effects mainly take place between EU parents and their affiliates located within the EU, rather than affiliates located in Central and Eastern Europe. (iii) We also report results for the non-manufacturing firms, where we find no substitution effects between parents and daughters in the service sectors, while we do find positive substitution effects between parents and their affiliates in Central and Eastern Europe for the firms operating in the wholesale trade and construction sectors.Our results suggest that on average the competit...

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Section: Related Literaturementioning

confidence: 94%

Do Multinational Enterprises Substitute Parent Jobs for Foreign Ones? Evidence from Firm Level Panel Data

Konings

Murphy

2001

SSRN Journal

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“…In order to achieve that objective, we will follow the "mandated wage" approach suggested by Leamer (1998). Krueger (1997) and Baldwin and Cain (2000) have used a similar methodology for the case of the United…”

Section: Methodology and Datamentioning

confidence: 99%

Technology, trade, and wage inequality in Mexico before and after NAFTA

Esquivel

Rodrı́guez-López

2003

Journal of Development Economics

134

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Abstract:Over the past few years, there has been a substantial increase in wage inequality between skilled and unskilled workers in Mexico. This increment in the wage gap coincided with both a period of rapid technological change and the process of trade liberalization in Mexico that began in the mid-eighties. Using a methodology suggested by Leamer (1998), we separate out the effects of technological progress and trade on the real wage evolution of skilled and unskilled workers in Mexico's manufacturing industry for the periods 1988-1994 and 1994-2000. We find that, as implied by the Stolper-Samuelson theorem, trade liberalization would have led to a reduction in the wage gap in Mexico in the first period. This effect, however, was offset by the large negative impact of technological progress on the real wage of unskilled workers. On the other hand, during the period 1994-2000 the effect of trade liberalization on the wage gap was nil, thus suggesting that the slight increase in wage inequality that occurred in this period was also driven by technological progress.JEL classification: F16, J31

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“…Baldwin and Hilton (1984) were among the first to estimate a price regression like (20). Recent applications include Sachs and Shatz (1994), Baldwin and Cain (1997), Krueger (1997), Leamer (1998), Feenstra andSlaughter (2000b).…”

Section: Estimation Of Zero-profit Conditionsmentioning

confidence: 99%