 Trade in Intermediates and the Rise in Wage Inequality in the UK: A GNP Function ApproachAlexander Hijzen No 224, Econometric Society 2004 North American Summer Meetings from Econometric Society Abstract: This paper contributes to the debate on trade and wages by estimating a GNP function for the United Kingdom using data for the period 1975-1999. Consistent with standard trade theory the GNP function treats factor supplies and output prices as exogenous and factor prices and output supplies as endogenous. Moreover, the GNP function explicitly distinguishes between different sectors and is therefore in principle consistent with general equilibrium trade theory. The signs of the estimated elasticities were mostly in line with theoretical predictions. The main findings of this paper are the following. Firstly, the skill bias of technological change is found to be the predominant source of the increase in wage inequality. Secondly, while the paper provides mixed results for the role of all trade, the results provide some evidence in support of the outsourcing-hypothesis which asserts that international outsourcing constitutes an important contributing factor to the widening wage gap. Finally, the factor-price insensitivity theorem does not seem to hold for the UK. Keywords: trade; factor supplies; wage inequality; GNP function (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ecm:nasm04:224 Access Statistics for this paper More papers in Econometric Society 2004 North American Summer Meetings from Econometric Society Contact information at EDIRC. |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.