Global Production Sharing and Rising Inequality: A Survey of Trade and Wages / Robert Feenstra, Gordon Hanson.

Format:

Book

Author/Creator:

Feenstra, Robert.

Contributor:

National Bureau of Economic Research.

Hanson, Gordon.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8372.

NBER working paper series no. w8372

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Global Production Sharing and Rising Inequality

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

We argue that trade in intermediate inputs, or 'global production sharing,' is a potentially important explanation for the increase in the wage gap between skilled and unskilled workers in the U.S. and elsewhere. Using a simple model of heterogeneous activities within an industry, we show that trade in inputs has much the same impact on labor demand as does skill-biased technical change: both of these will shift demand away from low-skilled activities, while raising relative demand and wages of the higher skilled. Thus, distinguishing whether the change in wages is due to international trade, or technological change, is fundamentally an empirical rather than a theoretical question. We review three empirical methods that have been used to estimate the effects of trade in intermediate inputs and technological change on wages, and summarize the evidence for the U.S. and other countries.

Notes:

Print version record

July 2001.