Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2002-09-04
Number: 02-088/2
Author-Name: Wilfred J. Ethier
Author-Email: ethierwj@msn.com
Author-Workplace-Name: Department of Economics, Faculty of Economics, University of Pennsylvania
Title: Globalization, Globalisation
Abstract: This paper addresses a complex of globalization issues: the effect of globalization on the skill premium; the effect of globalization on unemployment; the relative importance of globalization and exogenous technical change; the effect of globalization on the ability of national governments to conduct independent social policies. Thinking about these topics has been dominated by a large empirical literature concluding that trade has played a relatively minor role in the rise of the skill premium, while exogenous skill-biased technical change has played a major role. This paper replaces the focus on inter-sectoral substitution at the heart of the Stolper-Samuelson theorem with attention to intra-sectoral relations between inputs. Specifically, I assume that out-sourcing and unskilled labor are highIy substitutable and that equipment and skilIed labor are complementary , that production methods are flexible, and that the country undertaking out-sourcing has a significantIy different structure from that providing it. Globalization then offers a simple and immediate possible explanation for the prominent stylized facts regarding the emergence of the skill premium and for the presence of skill-biased technical change. Trade vs. technology remains as an empirical issue, though, because exogenous neutral technological change offers an alter-native possible explanation.
Classification-JEL: F02
Keywords: fragmentation; equipment utilization; out-sourcing; input substitution; input complementarity.
File-Url: https://papers.tinbergen.nl/02088.pdf
File-Format: application/pdf
File-Size: 958196 bytes
Handle: RePEc:tin:wpaper:20020088