1. Globalization and Inter- occupational Inequality in a Panel of Countries: 1983- 2003 Farzana Munshi Department of Economics University of Gothenburg, Sweden

2. 2 Background  Large interest on globalization, poverty and inequality.  Globalization bring long-run benefits to participating countries.  But globalization creates concern about distributional consequences.

3. 3 Background, cont’d  Globalization has many dimensions….  Openness to trade, the HOS prediction  Openness to capital  Outsourcing  Immigration

4. 4 Background, cont’d  Evidence of increased wage and income inequality in many developed countries.  Mixed evidence for developing countries.  Is globalization responsible?

5. 5 Background, cont’d  Skilled-biased technical change (computerization, IT revolution)  Labor market institution  Informal sector  Factor endowment  Different data, methodology

6. 6 Purpose  How does globalization (openness to trade & capital) affect inter-occupational wage inequality within countries?

7. 7 Data/variable  52 countries,21 time series observations.  Developed (15), Developing (37)  Occupational wages from the OWW (Freeman and Oostendorp,2000).  Country-occupation-time matrix; 150+ countries,163 occupations, 21 years.

8. 8 Data/variable  Occupational wage inequality  ISCO-88, ISCED-76  34 occupations; 19 skilled, 15 unskilled

9. 9 Econometric analysis  Dependent variable- Relative wages  Explanatory variables- Trade, FDI, GDP per capita, past relative wages Measure for technical change, supply effect not covered due to lack of data

10. 10 Econometric analysis  Present result estimating several models:OLS, fixed effects, 2SLS,GMM.  Dynamic fixed effects preferable

11. 11 Results  Openness to trade contributes to an increase in occupational wage inequality within developed countries, but effect diminishes with increased level of development.  Openness to trade has insignificant impact on wage gap within developing countries.  Openness to capital (FDI) has insignificant impact on either type of country.

12. 12  Thank you!