Wage inequality and skill supplies in a globalised world

Lorenzo Rotunno and Adrian Wood

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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)
Date: 2020-09
Note: View the original document on HAL open archive server: https://amu.hal.science/hal-02505834
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Published in Journal of Comparative Economics, 2020, 48 (3), pp.529-547. ⟨10.1016/j.jce.2019.12.006⟩

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Related works:
Journal Article: 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:hal:journl:hal-02505834

DOI: 10.1016/j.jce.2019.12.006

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