Trade and Technology as Competing Explanations for Rising Inequality

Since the late 1970s, wage inequality between skilled and unskilled workers has risen significantly in most OECD countries. This study thoroughly discusses and evaluates the three dominant approaches to explain this finding: trade liberalization towards developing countries, skill-biased technical change, and trade-induced skill-biased technical change. In particular, the author develops a two-country North-South Schumpeterian growth model without scale effects, and analyzes general equilibrium effects of trade, education and labor market policies. Moreover, this framework is also used to analyze whether rising low-skilled unemployment in Europe is just the flip side of the coin of rising wage inequality in the US.

Autorentext

The Author: Wolf-Heimo Grieben, born 1971 in Einbeck/Germany, studied economics at the University of Saarland/Saarbrücken and received his diploma in 1998. Until 2002 junior faculty member and Ph.D. scholar at the economics department of WHU Koblenz Otto Beisheim Graduate School of Management at the chair of Macroeconomics and International Economics. From 01/2001 to 06/2001 participation in the Ph.D. program of Stockholm School of Economics and Stockholm University. Since 10/2002 post-doc position in the Doctoral Program (Graduiertenkolleg) at the University of Dortmund.

Inhalt

Contents: The trade-based explanation of rising inequality: the Stolper-Samuelson argument The technology-based explanation of rising inequality: sector bias versus factor bias Sector-biased FNTC in a closed economy with endogenous growth A Schumpeterian North-South growth model of trade and wage inequality Wage inequality and unskilled unemployment: two sides of the same coin? Lessons about trade- and technology-based explanations of rising inequality.