Globalisation and Inter-occupational Inequality: Empirical Evidence from OECD Countries

Authors


  • We wish to thank Dick Durevall, Karolina Ekholm, Måns Söderbom, Remco Oostendorp and seminar participants at the University of Gothenburg, Sweden, Wilfred Laurier University, Canada, and Imperial College, London, for helpful comments on this paper. Financial grants from the Wallander-Hedelius Foundation are gratefully acknowledged. The usual disclaimers apply.

Abstract

How does globalisation affect inter-occupational wage inequality within countries? This paper examines this by focusing on two dimensions of globalisation: openness to trade and openness to capital flows, using a relatively new data set on occupational wages. Estimates from a dynamic model for 15 OECD countries spanning the period 1983–2003 suggest that increased openness increases occupational wage inequality in poorer OECD countries as predicted by the Heckscher–Ohlin–Samuelson model, but for the more advanced OECD countries, we find no significant effect. The absence of the expected result for the latter category can be due to a rapid increase in the supply of skilled labour, to outsourcing of skilled jobs or because changes in the trade flows are too small to have any significant effect in those countries.

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