Wage inequality and skill supplies in a globalised world

Lorenzo Rotunno and Adrian Wood

Journal of Comparative Economics, 2020, vol. 48, issue 3, 529-547

Abstract: We investigate empirically, and explain theoretically, how the relative wages of skilled and unskilled workers vary with their relative supplies in open economies. Our results combine the insights of simple labour market and trade models. In countries that trade, relative wages respond inversely to variation in skill supplies, but the response decreases with the degree of openness to trade and is small in very open countries. To reconcile our results with standard estimates of the elasticity of substitution between skilled and unskilled workers, we allow also for the influence of directed technical change and income elasticity of demand for skill-intensive goods.

Keywords: Wage inequality; Labour markets; Heckscher–Ohlin; Trade and wages; Directed technical change (search for similar items in EconPapers)
JEL-codes: F11 F16 J23 J31 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Wage inequality and skill supplies in a globalised world (2020)
Working Paper: Wage Inequality and Skill Supplies in a Globalised World (2017)
Working Paper: Wage Inequality and Skill Supplies in a Globalised World (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:48:y:2020:i:3:p:529-547

DOI: 10.1016/j.jce.2019.12.006

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