Victims of Progress: Economic Integration, Specialization, and Wages for Unskilled Labor
2000-07-31
Research Paper
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In this paper we demonstrate that intra-industry trade (or FDI) between identical countries could produce the observed deterioration in the relative wages of unskilled workers. This involves a model of North-North integration through either increased trade flows or increased MNE- based production. Our motivation in this regard is arguments to the effect that trade cannot be responsible for the observed labour market trends because trade with developing countries is quantitatively too small to have significant labour market effects. We also introduce a relatively unexploited class of model that possesses attractive properties with respect to the explicit incorporation of firm-theoretic considerations in trade models.
Keywords
Classifications using
Journal of Economic Literature (JEL) Classification System
- F15 : Economic Integration
- F16 : Trade and Labor Market Interactions
- J31 : Wage Level and Structure; Wage Differentials by Skill, Training, Occupation, etc.
Automatically Extracted Terms
- trade
- model
- labour
- paper
- effect
- production
- economy
- country
- market
- equilibrium
- labor
- specialization
- markusen
- return
- figure
- variety
- trading costs
- scale
- integration
- division
