The dollar, trade, technology and inequality in the USA

Bob Anderton and Paul Brenton

National Institute Economic Review, 1998, vol. 166, issue 1, 78-86

Abstract: The US experienced a considerable increase in inequality between skilled and less-skilled workers during the early 1980s-a period which corresponds with a large temporary appreciation of the dollar. This article investigates the reasons behind this rise in inequality by evaluating the impact of trade with low-wage countries (LWCs) and technological change on the wage bill share of skilled workers (which is designed to capture movements in inequal ity arising from changes in both the relative wage and employment opportunities of the less-skilled). We find that an increase in US imports from LWCs-encouraged by the large appreciation of the dollar in the early 1980s- seems to explain some of the rise in US inequality in low-skill-intensive sectors, but that technological change (proxied by R&D expenditure) explains the rise in inequality in high-skill-intensive sectors. However, given that the timing of the sudden rise in US R&D expenditure corresponds with the appreciation of the dollar, it may be the case that the deterioration in US trade competitiveness during this period contributed to the rapid increase in the rate of technological change via mechanisms such as 'defensive innovation'. Hence one might also argue that the technology-based explanation for the rise in US inequality could actually be a trade-based explanation.

Date: 1998
References: Add references at CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://ner.sagepub.com/content/166/1/78.abstract (text/html)

Related works:
Journal Article: The dollar, trade, technology and inequality in the USA (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:niesru:v:166:y:1998:i:1:p:78-86

Access Statistics for this article

More articles in National Institute Economic Review from National Institute of Economic and Social Research Contact information at EDIRC.
Bibliographic data for series maintained by SAGE Publications ().