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Globalization and Inter- occupational Inequality in a Panel of Countries: 1983- 2003 Farzana Munshi Department of Economics University of Gothenburg, Sweden
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2 Background Large interest on globalization, poverty and inequality. Globalization bring long-run benefits to participating countries. But globalization creates concern about distributional consequences.
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3 Background, cont’d Globalization has many dimensions…. Openness to trade, the HOS prediction Openness to capital Outsourcing Immigration
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4 Background, cont’d Evidence of increased wage and income inequality in many developed countries. Mixed evidence for developing countries. Is globalization responsible?
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5 Background, cont’d Skilled-biased technical change (computerization, IT revolution) Labor market institution Informal sector Factor endowment Different data, methodology
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6 Purpose How does globalization (openness to trade & capital) affect inter-occupational wage inequality within countries?
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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.
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8 Data/variable Occupational wage inequality ISCO-88, ISCED-76 34 occupations; 19 skilled, 15 unskilled
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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
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10 Econometric analysis Present result estimating several models:OLS, fixed effects, 2SLS,GMM. Dynamic fixed effects preferable
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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.
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12 Thank you!
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