International trade and investment.
Position | Rationale behind the decline in wages of unskilled workers |
The NBER's Program on International Trade and Investment, directed by Robert C. Feenstra of NBER and University of California, Davis, held its spring meeting in Cambridge on April 4-5. The discussion centered on the following papers and topics:
Jonathan Eaton and Samuel Kortum, NBER and Boston University, "Technology and Bilateral Trade"
Robert C. Feenstra, and Gordon H. Hanson, NBER and University of Texas, "Productivity Measurement and the Impact of Trade and Technology on Wages: Estimates for the United States, 1972-90"
James Harrigan, Federal Reserve Bank of New York, and Rita A. Balaban, University of Pittsburgh, "U.S. Wages in General Equilibrium: Estimating the Effects of Trade, Technology, and Factor Supplies, 1964-91"
Alessandra Casella, NBER and Columbia University, and James E. Rauch, NBER and University of California, San Diego, "Anonymous Market and Coethnic Ties in International Trade"
Donald R. Davis, NBER and Harvard University, "The Home Market and Economic Geography: Will Globalization De-industrialize Small Countries?"
Research Plans Focusing on the United States: J. David Richardson, NBER and Syracuse University; Matthew J. Slaughter, NBER and Dartmouth College; Linda S. Goldberg and Joseph Tracy, Federal Reserve Bank of New York; Lori Kletzer, University of California, Santa Cruz; Andrew Bernard, MIT; and Bradford Jensen, Carnegie-Mellon University Research Plans Focusing on Global Impacts: Robert C. Feenstra, Gordon H. Hanson, and James riga; Robert Z. Lawrence, NBER and Harvard University; Paul R. Krugman, NBER and MIT; Edward E. Leamer, NBER and University of California, Los Angeles; and Daniel Trefler, NBER and University of Toronto.
Innovative activity is concentrated in a small number of countries, but the benefits of innovation are experienced broadly. Eaton and Kortum develop a model of technology and trade to explore the role of trade in spreading the benefits of innovation. Their estimates imply an underlying elasticity of substitution among labor from different countries of around 3.5.
Feenstra and Hanson find that both foreign outsourcing and expenditures on high-technology equipment can explain a substantial amount of the relative increase in nonproduction wages that occurred during the 1980s. Comparatively, foreign outsourcing has a greater impact on the relative nonproduction wage than high-technology capital, but this result is somewhat sensitive to the specification that is used. Surprisingly...
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