Relative wages and trade-induced changes in technology
Working paper
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Date
2001-09Metadata
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- Discussion papers (SAM) [662]
Abstract
We develop a model where trade liberalization leads to skill-biased
technological change, which in turn raises the relative return to skilled
labor. When firms get access to a larger market, the relative profitability
of di¤erent technologies changes so that the relative profitability of
the more skill-intensive technology increases. As the composition of
firms changes to one with predominantely skill-intensive firms, the relative
demand for skilled labor increases. This way, we establish a link
between trade, technology and relative returns to skilled and unskilled labor.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2001:17