Chapter

Skill Differentials and Inequality in the North

Adrian Wood

in North-South Trade, Employment and Inequality

Published in print July 1995 | ISBN: 9780198290155
Published online November 2003 | e-ISBN: 9780191597015 | DOI: http://dx.doi.org/10.1093/0198290152.003.0007

Series: IDS Development Studies

 Skill Differentials and Inequality in the North

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Theory suggests that trade with the South increases the demand for skilled labour, relative to less‐skilled labour, in the North. Skill differentials in both wages and unemployment rates widened in most Northern countries during the 1980s, and in ways that could not have been generated by supply shifts. Closer examination of timing, magnitude, and variation among Northern countries tends to confirm the impression of consistency with the expected effects of expansion of trade with the South. Of the alternative possible explanations of the rising relative demand for skilled labour, by far the most plausible is autonomous technical progress with an unskilled‐labour‐saving bias. The limited evidence available is consistent with the view that trade played the larger role, but does not rule out the possibility that new technology was more important.

Keywords: demand; differentials; labour; skill; supply; technology; trade; unemployment; wages

Chapter.  19067 words.  Illustrated.

Subjects: International Economics

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