Relative Wages, Openness and Skill-Biased Technological Change

Holger Görg and Eric Strobl ()

No 596, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Standard neo-classical trade theory predicts that trade liberalisation should cause a fall in wage inequality in developing countries through a decrease in the relative demand for skilled labour. Recent studies of a number of developing countries, however, find evidence to the contrary. Using a panel of manufacturing firms in the 1990s we investigate whether skillbiased technological change induced through imports of technology-intensive capital goods or export activity may provide an explanation for the increase in relative wages of skilled workers in Ghana. Estimates of a skilled worker relative demand equation based on a translog cost function show that changes in technology through a greater inflow of foreign machinery is found to be indeed consistent with skill-biased technological change in Ghana.

Keywords: wage inequality; trade liberalisation; skill-biased technological change (search for similar items in EconPapers)
JEL-codes: F14 J31 O33 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2002-10
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Citations: View citations in EconPapers (34)

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