The Effect of Globalization on Wages in the Advanced Economies
IMF Working Papers, April 1, 1997
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Bibliographic details
- Authors: Phillip L Swagel, Matthew J. Slaughter
- Published: April 1, 1997
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451846294.001
Main findings
- The broad consensus of research is that globalization—both increased trade and increased capital mobility and foreign direct investment—has had only a modest effect on wages.
- Changes in technology have led to a pervasive shift in demand for labor that has favored skilled workers to the detriment of less skilled workers.
- The paper focuses on the claim that increased economic integration has widened the gap between the wages of more skilled and less skilled workers and finds technology to be the primary driver of that shift.
Scope and analytical focus
- Geographic focus: advanced economies.
- Labor market dimensions examined: wages, labor demand, labor markets, job market, wage differentials.
- Globalization channels considered: imports, import competition, trade, capital mobility, foreign direct investment.
- Related economic concepts discussed: factor price, factor price elasticities of demand, price equalization theorem, product price change, rate of return, per capita income.
Implications and interpretive points
- While globalization contributes to labor market pressures, its quantitative impact on wage outcomes is described as modest relative to technological change.
- Policy and debate should distinguish between effects attributable to trade and capital flows and those arising from technology-driven changes in labor demand.
Keywords and subjects (as given)
- Subjects: Imports, Income inequality, International trade, Labor, Labor demand, Labor markets, National accounts, Wages.
- Keywords: capital mobility, Europe, factor, factor price, factor price elasticities of demand, firm, Global, Globalization, import competition, Imports, Income inequality, job market, Krugman terms, Labor demand, Labor markets, North America, per capita income, price equalization theorem, product price, product price change, rate of return, trade, trade and wages, trade competition, trade economist, wage, wage differential, Wages, WP.
Phillip L. Swagel and Matthew J. Slaughter, "The Effect of Globalization on Wages in the Advanced Economies", IMF Working Papers 1997, 043 (1997).
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- The Effect of Globalization on Wages in the Advanced Economies - WP/97/43