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Globalization and Employment: Imported Skill-Biased Technological Change in Developing Countries
- IZA Discussion Papers 2797. Institute for the Study of Labor (IZA
"... Abstract This paper discusses the impact of the international transfer of embodied technological change on the employment evolution of skills in a sample of low and middle income countries (LMICs). A large body of literature has already underlined the occurrence of widening wage and employment di¤e ..."
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Abstract This paper discusses the impact of the international transfer of embodied technological change on the employment evolution of skills in a sample of low and middle income countries (LMICs). A large body of literature has already underlined the occurrence of widening wage and employment di¤erentials between skilled and unskilled workers in high-income countries (HICs) This paper provides a direct measure of technology transfer from HICs, that is from those economies which have already experienced the occurrence of skill-biased technological change, to LMICs. GMM techniques are applied to an original panel dataset comprising 28 manufacturing sectors for 23 countries over a decade. Econometric results provide direct robust evidence of the absolute skill-bias e¤ect of technology import in LMICs which, therefore, represents an important determinant of the growing divide between skilled and unskilled workers in these countries.
Regional Inequality and the
- Process of National Development.” Economic Development and Cultural Change 13(4):3–45
, 1965
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Cited by 17 (1 self)
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you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at.
Imported Skill Biased Technological Change in Developing Countries
, 2011
"... This paper discusses the occurrence of skill-enhancing technology import, namely the relationship between imports of embodied technology and widening skill-based employment differentials in low and middle-income countries. GMM techniques are applied to an original panel dataset comprising 28 manufac ..."
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Cited by 5 (4 self)
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This paper discusses the occurrence of skill-enhancing technology import, namely the relationship between imports of embodied technology and widening skill-based employment differentials in low and middle-income countries. GMM techniques are applied to an original panel dataset comprising 28 manufacturing sectors for 23 countries over a decade. Econometric results provide robust evidence of the determinants of widening employment differentials in low and middle-income countries. In particular, the proposed empirical evidence indicates capital-skill complementarity as a possible source of skill-bias, while imported skill-enhancing technology emerges as an additional driver of increasing demand for the skilled workers in these countries.
Trade, Inequality, and Poverty: What Do We Know? Evidence from Recent Trade Liberalization Episodes in Developing Countries
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Trade and the Skill Premium Puzzle with Capital Market Imperfections
"... Abstract An interesting puzzle is that trade liberalization in the 1980s and 1990s has been associated with a sharp increase in the skill premium in both developed and developing countries. This is in contrast with neoclassical theory, according to which trade should increase the relative return of ..."
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Abstract An interesting puzzle is that trade liberalization in the 1980s and 1990s has been associated with a sharp increase in the skill premium in both developed and developing countries. This is in contrast with neoclassical theory, according to which trade should increase the relative return of the relatively abundant factor. We develop a simple model of trade with capital market imperfections, and show that trade can increase the skill premium in both the North and the South, and both in the short run as well as in the long run. We show that trade with a skill-intensive economy has two effects: it reduces the skilled wage, and thus discourages non talented agents out of the skilled labor force; and it reduces the cost of subsistence, thus allowing the talented offspring of unskilled workers to go to school. This compositional effect has a positive effect on the observed skill premium, possibly strong enough to counterweight the decrease in the skilled wage. JEL Codes: F16, O15, O16
Acknowledgements
"... We would like to thank, without implicating, Matias Busso for help with the plant data. The views expressed in this paper are those of the authors and should not be attributed to the Inter-American Development Bank. Globalization, product differentiation and wage inequality by Paulo Bastos and Odd R ..."
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We would like to thank, without implicating, Matias Busso for help with the plant data. The views expressed in this paper are those of the authors and should not be attributed to the Inter-American Development Bank. Globalization, product differentiation and wage inequality by Paulo Bastos and Odd Rune Straume This paper develops a two-country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by firms ' strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than production. Greater import competition increases innovation incentives, and thereby the relative demand for skill. An intraindustry trade expansion following trade liberalization can therefore increase wage inequality between skilled and unskilled workers. In addition, since product differentiation is resource consuming, freer trade entails a potential trade-off between production and variety. The import competition effect highlighted by the model, which plays a key role in determining the general equilibrium, is supported by panel data on Chilean manufacturing plants.
Philippine Institute for Development Studies Surian sa mga Pag-aaral Pangkaunlaran ng Pilipinas Determinants of Individual Trade Policy Preference in the Philippines
, 2004
"... constitutes studies that are preliminary and subject to further revisions. They are being circulated in a limited number of copies only for purposes of soliciting comments and suggestions for further refinements. The studies under the Series are unedited and unreviewed. The views and opinions expres ..."
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constitutes studies that are preliminary and subject to further revisions. They are being circulated in a limited number of copies only for purposes of soliciting comments and suggestions for further refinements. The studies under the Series are unedited and unreviewed. The views and opinions expressed are those of the author(s) and do not necessarily reflect those of the Institute. Not for quotation without permission from the author(s) and the Institute.
QEH Working Paper Series- QEHWPS37 Page 1 Working Paper Number 37 Income Distribution And Development*
"... Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people’s health. The paper reviews the connections between in ..."
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Income distribution is extremely important for development, since it influences the cohesion of society, determines the extent of poverty for any given average per capita income and the poverty-reducing effects of growth, and even affects people’s health. The paper reviews the connections between income distribution and economic growth. It finds that the Kuznets hypothesis that income distribution worsens as levels of income increase is not at all strongly supported by the evidence, while growth rates of income are not systematically related to changes in income distribution. However, evidence is accumulating that more equal income distribution raises economic growth. Both political and economic explanations have been advanced. The finding suggests that more equal income distribution is desirable both for equity and for promoting growth. Strategies to promote more egalitarian growth are reviewed, with examples given. However, although these strategies seem both feasible and desirable, in the 1980s and 1990s there has been a strong tendency for income distribution to worsen in both developed and developing countries. A variety of explanations as to the cause for this have been advanced including trade liberalization, technology change, and the impact of liberalization and globalization more
Paths of Development and Income Distribution in the Global Economy
, 2000
"... The empirical evidence on income distribution for developing economies stands in contrast to the prediction of standard neoclassical trade theory according to which the skill premium should decrease in unskilled laborabundant countries following an opening to trade. This paper develops a dynamic, th ..."
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The empirical evidence on income distribution for developing economies stands in contrast to the prediction of standard neoclassical trade theory according to which the skill premium should decrease in unskilled laborabundant countries following an opening to trade. This paper develops a dynamic, three-good, three-factor, general equilibrium model of a small open developing economy. Initial factor endowments and their dynamics along the development process play an essential role in the determination of factor prices and functional income distribution. The model allows for a rich set of paths of development. Although no formal testing is undertaken, the predictions of the model are broadly consistent with the empirical facts of a set of developing economies. For instance, the model is able to replicate the rising skill premium in Latin American countries following their increased opening to trade. This prediction is based on the local abundance of human capital in Latin America, relative to other economies that opened up around the same time. The others include many South Asian countries, which were then locally scarce in human capital.
The Skill Bias of World Trade∗ Paolo
, 2007
"... This paper suggests that international trade, even between identical countries, can raise the relative demand for skilled labour. It shows that a simple generalization of Krugmans (1979) model of trade in differentiated products has implications for the skill premium, through economies of scale rath ..."
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This paper suggests that international trade, even between identical countries, can raise the relative demand for skilled labour. It shows that a simple generalization of Krugmans (1979) model of trade in differentiated products has implications for the skill premium, through economies of scale rather than Hecksher-Ohlin effects, that are consistent with a number of stylized facts. It provides new evidence in support of these results by showing that increases in market size lead to higher returns to education, skill premia and income inequality. JEL classiÞcation: F12, F16.
