Globalization, technology, and the skill premium
Subtitle: a quantitative analysis
By: Ariel Burstein, Jonathan Vogel
Contributors: Vogel, Jonathan, 1979-; National Bureau of Economic Research
Series: NBER working paper series -- working paper 16459; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 16459.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We construct a model of international trade and multinational production (MP) to examine the impact of globalization on the skill premium in skill-abundant and skill-scarce countries.  The key mechanisms in our framework arise from the interaction between three elements: cross-country differences in factor endowments and sectoral productivities, technological heterogeneity across producers within sectors, and skill-biased technology.  Reductions in trade and/or MP costs induce a reallocation of resources towards a country's comparative advantage sector (increasing the skill premium in skill-abundant countries and reducing it in skill-scarce countries) and within sectors towards more productive and skill-intensive producers (increasing the skill premium in all countries).We parameterize the model to match salient features of the extent and composition of trade and MP between the U.S.  and skill-abundant and skill-scarce countries in 2006.  We show that a reduction in trade and MP costs, moving from autarky to 2006 levels of trade and MP, increases the skill premium by roughly 5% in skill-abundant and skill-scarce countries.  We also show that the growth in US trade and MP between 1966 and 2006 accounts for 1/9th of the 24% rise in the US skill premium over this period.  MP is at least as important as international trade in generating this rise in the skill premium"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 3/8/2011.

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