Globalization, Roundaboutness and Relative Wages
Kevin Grier () and
Douglas Nelson ()
No 4406, CEPR Discussion Papers from C.E.P.R. Discussion Papers
We depart from the trade and wages literature and its emphasis on North-South trade, examining North-North trade and linkages between trade-based integration and relative wages in an Etiher-type division of labor model. Using this model we identify a formal relationship between international trade, productivity, and wages. We then examine the trivariate relationship between trade, growth in total factor productivity (TFP), and the skill premium in a vector autoregression framework. We find evidence of a long-run relationship between growth in intermediate goods and changes in TFP. Controlling for this relationship we also find a positive relationship between trade and the skill-premium.
Keywords: division of labour; globalization; intra-industry trade; monopolistic competition; trade and wages (search for similar items in EconPapers)
JEL-codes: F12 F16 (search for similar items in EconPapers)
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Working Paper: Globalization, Roundaboutness, and Relative Wages (2004)
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