The 1990s trade and wages debate in retrospect

Abstract

This paper revisits the trade and wages debate of the 1990s in the light of widespread concern that, contrary to the consensus from that debate, the costs of globalisation to less‐skilled workers in developed countries have been an important cause of the recent rise of populism. The 1990s debate stimulated a new and now large field of economic research, but in hindsight it suffered from errors of omission on both sides, and from an academic perspective it ended prematurely. Even now, the available evidence does not permit any firm conclusion about the contribution of globalisation to the rise in inequality in developed countries over the past few decades. The economic consensus at the end of the debate also fostered unwarranted political complacency about the social costs of globalisation.

US exports and employment

“…As with the industry measure of trade shocks, the CZ level import and export exposures are also likely to be subject to endogeneity problem. Therefore we apply the Bartik formula to 19 Then we apply the Bartik local employment weights to the fitted value of the above estimation, obtaining our two constructed commuting zone level instruments for ∆EP CZ it .…”

“…All regressions are weighted by the start of period (1991) commuting zone's share of national population, and the standard errors are clustered at the commuting zone level. Table 7 presents results for the manufacturing employment share, for both 1991-2007 and 1991-2011 and with different sets of instruments for export expansion (as indicated in the title 19 Running this estimation prior to the industry-level estimation won't affect these previous results in section row). The first four columns focus on 1991-2007, starting with EP OT H as the instrument for exports.…”

“…The implied employment effect of US manufacturing exports to the world is similar to that found here. See also note 5 and the paper by Wood (2017), who uses a global input-output analysis to focus on US imports and exports with developing countries.…”

The ‘China shock,’ exports and U.S. employment: A global input–output analysis

“… See also Liang () who studies both U.S. imports and exports. Wang, Wei, Yu, and Zhu () and Shen and Silva () extend the regression analysis of Autor et al (, ) to include upstream and downstream linkages. …”

International competition, returns to skill and labour market adjustment

“… An important exception to this consensus is Wood (, ). For surveys of the literature on globalisation and inequality, see Bardhan (), Feenstra and Hanson (), Goldberg and Pavcnik (, ), Greenaway and Nelson () and Messiana and Silva ().…”