Globalization, Roundaboutness, and Relative Wages
2004-02-23
Research Paper
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We depart from the trade and wages literature and its emphasis on North-South trade, examining North-North by developing the basic linkages between trade-based integration and relative wages in an Ethier-type division of labor model. Using this model we identify a formal relationship between international trade, productivity, and wages. We then examine the trivariate relationship between trade, growth in total factor productivity (TFP), and the skill premium in a vector autoregression framework. We find evidence of a long-run relationship between growth in intermediate goods and changes in TFP. Controlling for this relationship we also find a positive relationship between trade and the skill-premium.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- F16 : Trade and Labor Market Interactions
- F12 : Models of Trade with Imperfect Competition and Scale Economies
Automatically Extracted Terms
- trade
- model
- lwintt
- response
- productivity
- relationship
- skill premium
- lwintt 2
- ltfpint
- effect
- system
- labor
- lsp 2
- skill
- shock
- premium
- variable
- growth
- division
- equation
