In this important and topical book, Adrian Wood demonstrates that recent changes in North-South trade have had a far larger impact on labor markets than earlier studies imply, altering the relative demand for skilled and unskilled workers in the two regions. Developing his argument by incorporating three fields of economics--international, labor, and development--he suggests policies that could reduce the resulting social dislocation in the North, without jeopardizing world trade or economic progress in the South. Wood argues that there are grounds for qualified eptimism despite this problem. Greater trade should mean greater prosperity for developing countries, and less global inequality, while for developed countries it should mean workers are available to produce sophisticated exports, which the South cannot produce. Northern governments must take action to avoid the situation of rising unemployment and protectionism in the North, and exploitation of labor in the South. Wood argues that this can be done not through protectionism, but through investment in education and training to raise the supply of skilled labor.
Author(s): Adrian Wood
Year: 1995
Language: English
Pages: 536
Contents......Page 14
List of Figures......Page 20
List of Tables......Page 22
1.1 Trends and disputes......Page 26
1.2 Skill as the basis of North–South trade......Page 29
1.3 Causes of the change in North–South trade......Page 32
1.4 Size of the impact on labour markets......Page 33
1.5 Sectoral effects of the change in trade......Page 36
1.6 Skill differentials and inequality in the South......Page 38
1.7 Skill differentials and inequality in the North......Page 39
1.8 Unemployment in the North......Page 42
1.9 Will the future be like the past?......Page 43
1.10 Policy implications in the South......Page 45
1.11 Policy implications in the North......Page 47
1.12 Costs of being wrong......Page 49
2.1.1 Initial sketch......Page 52
2.1.2 Relative factor price convergence......Page 53
2.1.3 Transport costs......Page 55
2.1.4 Land......Page 56
2.2 Capital......Page 57
2.2.1 Nature of capital......Page 58
2.2.2 Nontraded capital goods......Page 59
2.2.3 Scarcity and profitability......Page 61
2.2.4 Comparative advantage and capital intensity......Page 63
2.3.1 Heckscher–Ohlin assumptions......Page 66
2.3.2 Direct and indirect skill......Page 68
2.3.3 Ricardian theory reinterpreted......Page 70
2.4.1 Common denominators of skill......Page 72
2.4.2 Skill categories......Page 73
2.4.3 Skill formation......Page 76
2.4.4 International labour mobility......Page 79
2.5.1 Relative wages......Page 81
2.5.2 Real wages......Page 83
2.6 Summary......Page 84
Part A: Patterns and Magnitudes......Page 88
Introduction......Page 89
3.1 Factor content methodology......Page 92
3.2 Disentangling skill and capital......Page 99
3.3 Studies of the South......Page 108
3.4 Studies of the North......Page 121
3.5 Joint North–South studies......Page 134
3.6 Summary......Page 144
4.1 Methodology......Page 146
4.2 Factor content coefficients......Page 151
4.3 Output effects......Page 163
4.4 Impact on factor demand......Page 172
4.5 Summary......Page 191
Part B: Causes and Consequences......Page 194
Introduction......Page 195
5.1 Causes of change in North–South trade......Page 196
5.2 Wage and employment effects......Page 207
5.3 Sectoral consequences in the South......Page 211
5.4 Sectoral consequences in the North......Page 216
5.5 Summary......Page 235
6.1 Theoretical considerations......Page 238
6.2 Changes in income inequality......Page 243
6.3 Time-series case studies......Page 252
6.4 Summary......Page 269
7.1 Trends in skill differentials......Page 272
7.2 Consistency of the trade explanation......Page 280
7.3 Another explanation: new technology......Page 298
7.4 Summary......Page 312
8.1 Alternative explanations......Page 315
8.2 Evidence on mismatch......Page 321
8.3 Cross-country variation......Page 334
8.4 Summary......Page 346
Part C: Prospects and Policies......Page 350
Introduction......Page 351
9.1 General approach......Page 352
9.2 Trade barrier reductions......Page 355
9.3 Skill supply changes......Page 362
9.4 Summary......Page 369
10.1 Problems and possibilities......Page 371
10.2 Motives for intervention......Page 373
10.3 Policy instruments......Page 377
10.4 Alternative policy packages......Page 399
10.5 Costs of being wrong......Page 413
10.6 Summary......Page 418
A1.1 Delinked intermediates and value added......Page 420
A1.2 Wages and profits......Page 421
A1.3 White-collar and blue-collar workers......Page 422
A1.4 Blue-collar wage levels......Page 423
A1.5 SKILD and BAS-ED workers......Page 427
A1.6 Labour quality adjustment......Page 429
A1.7 Cost of capital......Page 430
A2.1 Method......Page 432
A2.2 Education......Page 433
A2.3 Occupation......Page 434
A2.4 Wages......Page 438
A2.6 Real value added......Page 443
A2.7 Conclusions......Page 448
A3.1 Relative wage trends......Page 450
A3.2 Relative unemployment trends......Page 456
A3.3 Supply-side explanations......Page 458
A4 Occupational Relativities......Page 460
A4.1 Relative wages of white-collar and blue-collar workers......Page 461
A4.2 More specific occupational wage relativities......Page 464
A4.3 Relative unemployment and vacancy rates......Page 469
A4.4 Demand, supply, and employment trends......Page 472
A4.5 Annexe: definitions and sources of wage data......Page 478
A5 Wage Dispersion and Income Inequality......Page 483
A5.1 Trends in wage dispersion......Page 484
A5.2 Causal interpretations......Page 488
A5.3 Income inequality......Page 491
References......Page 496
B......Page 518
D......Page 519
F......Page 520
H......Page 521
J......Page 522
L......Page 523
M......Page 524
O......Page 525
R......Page 526
S......Page 527
T......Page 528
W......Page 529
Y......Page 530
