Chapter

The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France

Vanessa Strauss-Kahn

in Challenges to Globalization

Published by University of Chicago Press

Published in print April 2004 | ISBN: 9780226036151
Published online February 2013 | e-ISBN: 9780226036557 | DOI: http://dx.doi.org/10.7208/chicago/9780226036557.003.0007
The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France

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Increased trade (or potential trade) with developing countries is often blamed for the depression of unskilled wages and employment in the Organization for Economic Cooperation and Development (OECD) countries. Many economists have argued, however, that trade flows are not large enough to have had such effects or that commodity prices have not evolved in the way that such a hypothesis requires. Recently, however, research has revealed that vertical specialization—slicing up the value chain to take less-skilled operations abroad—could affect unskilled wages without final commodity price changes or large actual trade flows. This chapter explores this possibility in France over the period 1977–1993. It shows that a decrease in trade costs (globalization) modifies the international structure of production toward vertical specialization, and that shifting relative labor demand across countries increases skilled and unskilled wage inequality in a way that is observationally equivalent to skilled-biased technological progress. A commentary is also included at the end of the chapter.

Keywords: unskilled labor; globalization; vertical specialization; trade costs; wage inequality

Chapter.  10622 words. 

Subjects: International Economics

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