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Please use this identifier to cite or link to this item: https://dspace.lboro.ac.uk/2134/4202

Title: Sector-specific factors and the trade and wages debate
Authors: Edwards, T. Huw
Keywords: Trade
Inequality
Globalisation
Factor immobility
Issue Date: 2008
Publisher: © Loughborough University
Series/Report no.: Loughborough University. Department of Economics. Discussion Paper Series;WP 2008 - 10
Abstract: I outline the potential implications of sectoral factor immobility for the debate on the effects of low-wage competition on wage inequality in advanced countries. In theory, the presence of sector-specific factors serves to damp the magnification effect of World traded prices upon relative wages, by reducing the shift of output from unskilled-intensive to skilled-intensive sectors, and Edwards and Whalley (2007) have shown that only modest amounts of fixed factors are required to alter results qualitatively. There is evidence among OECD countries of a negative relationship between the structural decline of manufacturing since 1970 and increasing wage inequality: it is argued that the less flexible labour market institutions in Continental Europe may have mitigated the downward pressure on unskilled wages by this route, particularly if factor depreciation is of an ongoing maintenance cost variety.
Description: This is a working paper. It is also available at: http://ideas.repec.org/p/lbo/lbowps/2008_10.html
Version: Published
URI: https://dspace.lboro.ac.uk/2134/4202
ISSN: 1750-4171
Appears in Collections:Working Papers (Economics)

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