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Challenges to GlobalizationAnalyzing the Economics$
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Robert E. Baldwin and L. Winters

Print publication date: 2004

Print ISBN-13: 9780226036151

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226036557.001.0001

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

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

(p.209) 6 The Role of Globalization in the Within-Industry Shift Away from Unskilled Workers in France
Challenges to Globalization

Vanessa Strauss-Kahn

University of Chicago Press

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

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