Foreign Competition and Wage Inequality
Author | : J. Peter Neary |
Publisher | : |
Total Pages | : 36 |
Release | : 2002 |
Genre | : Competition, International |
ISBN | : |
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Author | : J. Peter Neary |
Publisher | : |
Total Pages | : 36 |
Release | : 2002 |
Genre | : Competition, International |
ISBN | : |
Author | : George J. Borjas |
Publisher | : |
Total Pages | : 56 |
Release | : 1993 |
Genre | : Competition, International |
ISBN | : |
In this paper, we present theory and evidence on the link between wage inequality and foreign competition in concentrated industries. We develop a simple model in which the impact of foreign competition on the relative wages of an economy depends on the market structure of the industry penetrated. We show that the more concentrated is the industry, the greater is the impact of trade on general wage inequality. We use the theory to argue why import competition in an industry such as automobiles is much more deleterious to the wages of the less educated than import competition in an industry such as apparel. We then test our hypothesis using a panel data set on relative wages across SMSAs. We reinterpret our model as a model of local economies, and test it using both the cross-sectional and time- series variation across labor markets.
Author | : |
Publisher | : |
Total Pages | : |
Release | : 2004 |
Genre | : |
ISBN | : |
Author | : Edward E. Leamer |
Publisher | : |
Total Pages | : 50 |
Release | : 1996 |
Genre | : Wages |
ISBN | : |
Author | : Katja Blenck |
Publisher | : |
Total Pages | : 18 |
Release | : 1998 |
Genre | : |
ISBN | : |
Author | : Klaus Waelde |
Publisher | : |
Total Pages | : 24 |
Release | : 2004 |
Genre | : |
ISBN | : |
Author | : Yana van der Meulen Rodgers |
Publisher | : World Bank Publications |
Total Pages | : 44 |
Release | : 2003 |
Genre | : Information technology |
ISBN | : |
This study explores the impact of competition from international trade on wage discrimination by sex in two highly open economies. If discrimination is costly, as posited in neoclassical theory based on Becker (1959), then increased industry competitiveness from international trade reduces the incentive for employers to discriminate against women. Alternatively, increased international trade may contribute to employment segregation and reduced bargaining power for women to achieve wage gains. The approach centers on comparing the impact of international trade on wage discrimination in concentrated and nonconcentrated sectors. The effect of international trade competition is expected to be more pronounced in concentrated sectors, where employers can use excess profits in the absence of trade to cover the costs of discrimination. Wage discrimination is proxied by the portion of the wage gap that cannot be explained by observable skill differences between men and women. The empirical model is estimated using a rich panel data set of residual wage gaps, trade ratios, and alternative measures of domestic concentration for Taiwan (China) and the Republic of Korea during the 1980s and 1990s. Results indicate that in contrast to the implications of neoclassical theory, competition from foreign trade in concentrated industries is positively associated with wage discrimination. These results imply that concerted efforts to enforce equal pay legislation and apply effective equal opportunity legislation are crucial for ensuring that women's pay gains will match those of men in a competitive environment. This paper--a product of the Gender Division, Poverty Reduction and Economic Management Network--is part of a larger effort in the network to understand the impact of trade on labor markets.
Author | : Robert Z Lawrence |
Publisher | : Columbia University Press |
Total Pages | : 105 |
Release | : 2008-01-01 |
Genre | : Political Science |
ISBN | : 088132485X |
International trade accounts for only a small share of growing income inequality and labor-market displacement in the United States. Lawrence deconstructs the gap in real blue-collar wages and labor productivity growth between 1981 and 2006 and estimates how much higher these wages might have been had income growth been distributed proportionately and how much of the gap is due to measurement and technical factors about which little can be done. While increased trade with developing countries may have played some part in causing greater inequality in the 1980s, surprisingly, over the past decade the impact of such trade on inequality has been relatively small. Many imports are no longer produced in the United States, and US goods and services that do compete with imports are not particularly intensive in unskilled labor. Rising income inequality and slow real wage growth since 2000 reflect strong profit growth, much of which may be cyclical, and dramatic income gains for the top 1 percent of wage earners, a development that is more closely related to asset-market performance and technological and institutional innovations rather than conventional trade in goods and services. The minor role of trade, therefore, suggests that any policy that focuses narrowly on trade to deal with wage inequality and job loss is likely to be ineffective. Instead, policymakers should (a) use the tax system to improve income distribution and (b) implement adjustment policies to deal more generally with worker and community dislocation.
Author | : Robert C. Feenstra |
Publisher | : |
Total Pages | : 28 |
Release | : 1996 |
Genre | : Income distribution |
ISBN | : |
Abstract: There is considerable debate over whether international trade has contributed to the declining economic fortunes of less skilled workers. One issue that has become lost in the current discussion is how firms respond to import competition and how these responses, in turn, are transmitted to the labor market. In previous work, we have argued that outsourcing, by which we mean the import of intermediate inputs by domestic firms, has contributed to an increase in the relative demand for skilled labor in the United States. If firms respond to import competition from low-wage countries by moving non- skill-intensive activities abroad, then trade will shift employment towards skilled workers within industries. In this paper, we extend our previous work by combining new import data from the revised NBER trade database with disaggregated data on input purchases from the Census of Manufactures. We construct industry-by-industry estimates of outsourcing for the period 1972-1990 and reexamine whether outsourcing has contributed to an increase in relative demand for skilled labor. Our main finding is that outsourcing can account for 31-51% of the increase in the relative demand for skilled labor that occurred in U.S. manufacturing industries during the 1980s, compared to our previous estimate of 15-33%.
Author | : Ms. Kimberly Beaton |
Publisher | : International Monetary Fund |
Total Pages | : 44 |
Release | : 2021-07 |
Genre | : Business & Economics |
ISBN | : 1513584359 |
This paper examines the impact of trade on employment, wages, and other outcomes across countries and explores the conditions and policies that help spread the gains from trade more evenly throughout the population. We exploit a large global firm-level dataset to examine the impact of import competition on employment, wages, and firm performance, as well as the firm, industry, and country factors that mitigate any negative impact of an import shock. In contrast to the results of some well-known single-country studies, we find limited adverse impact of import competition. In some countries and industries, import competition actually strengthens employment growth. In addition, import competition tends to improve average wages, investment, and firm profitability. Country characteristics, such as educational attainment, can also improve employment prospects in response to trade shocks. Finally, we find that firms experiencing greater import competition start with higher average wages; thus any relatively slower employment growth in this group of firms could lead to lower inequality.