Explaining Rising Inequality: Skill‐biased Technical Change and North–south Trade*

Abstract

We review the 'skill-biased technological change (SBTC) versus North-South trade (NST)' debate in order to explain widening wage inequality between skilled and unskilled workers. The traditional explanations based on exogenous SBTC and on the North-South Heckscher-Ohlin-Samuelson approach, as well as the early estimates that diagnosed a clear prevalence of the former, are firstly exposed and discussed. A presentation is then made of the recent theoretical literature that endogenizes SBTC, introduces new channels of impacts from NST, and combines both explanations. Finally, the current estimates show that (i) both explanations are relevant, (ii) their impacts differ according to industries and countries, (iii) outsourcing is the main vector of impact from NST and (iv) SBTC and NST interact.

Trade, SBTC and Skill Premia – A Cross-Country and Cross-Gender Analysis

“…Even among these studies, only Card and DiNardo (2002) analyze gender as more than a side question. Chusseau et al (2008) extensive literature survey supports this conclusion, highlighting the poor attention devoted to how SBTC and/or IT impacted over gender-based wage inequality. Nevertheless, there is a small amount of studies combining skill premia and gender in the analysis.…”

“…Most of them dealt do not focus in explaining asymmetries across gender, nor deal with it as a primary research issue. The surveys of Chusseau et al (2008) on the gender-gap literature and of Brown and Campbell (2002) on the skill-premia literature highlight the scarce amount of analysis combining both approaches and which Acemoglu (1998) stated, may be an important contribution to the skill premia debate. Hence, we will focus our contribution on this matter, trying to assess how the skill premia evolved across gender, analyzing how IT and SBTC impacted on gender-based inequality.…”

The Entrepreneurial State by Mariana Mazzucato: A critical engagement

“…She overlooks the studies on labour-saving technologies, the employment impact of innovation, and the effects of Information and Communication Technologies (ICTs) on the structures of wages and employment (see, for example, Greenan et al, 2002;Vivarelli, 2014). She also ignores more recent literature seeking to integrate the analysis of the influence of technological change and North-South trade upon wage inequalities in western countries (for example, Chusseau et al, 2008). These questions are are also a key focus for international financial institutions like the World Bank.…”

A vibrant European labor market with full employment

“…OECD (2011) and Chusseau et al (2008) document how increased imports from lowincome countries (including outsourcing) also pushed out routine labor jobs in OECD countries. At the same time, according to these studies, the effect of the rapid rise in the integration of trade and financial markets has hardly impacted the relative shift in labor demand, in favor of highly-skilled workers.…”