Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2004-02-23
Number: 04-021/2
Author-Name: Joseph Francois
Author-Email: francois@few.eur.nl
Author-Workplace-Name: Faculty of Economics, Erasmus Universiteit Rotterdam, and CEPR
Author-Name: Kevin Grier
Author-Workplace-Name: University of Oklahoma
Author-Name: Douglas Nelson
Author-Workplace-Name: Tulane University & Leverhulme Centre (Nottingham)
Title: Globalization, Roundaboutness, and Relative Wages
Abstract: We depart from the trade and wages literature and its emphasis on North-South trade, examining North-North by developing the basic linkages between trade-based integration and relative wages in an Ethier-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.
Classification-JEL: F16; F12
Keywords: trade and wages; globalization; division of labor; monopolistic competition; intra-industry trade
File-Url: https://papers.tinbergen.nl/04021.pdf
File-Format: application/pdf
File-Size: 230891 bytes
Handle: RePEc:tin:wpaper:20040021