Dynamic Globalization and Its Potentially Alarming Prospects for Low-Wage Workers

Hans Fehr (), Sabine Jokisch and Laurence Kotlikoff ()

No 14527, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Will incomes of low and high skilled workers continue to diverge? Yes says our paper's dynamic, six-good, five-region -- U.S., Europe, N.E. Asia (Japan, Korea, Taiwan, Hong Kong), China, and India -- general equilibrium, life-cycle model. The model predicts a near doubling of the ratio of high- to low-skilled wages over the century. Increasing wage inequality arises from a traditional source -- a rising worldwide relative supply of unskilled labor, reflecting Chinese and Indian productivity improvements. But China's and India's education policies matter. If successive Chinese and Indian cohorts become more skilled, major exacerbation of inequality will be precluded.

JEL-codes: F0 F20 H0 H3 J20 O0 O23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-cwa, nep-dev, nep-dge and nep-lab
Date: 2008-12
Note: AG DAE ITI LE ME PE PR
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