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Relative Wages, Openness and Skill-Biased Technological Change

Author

Listed:
  • Görg, Holger

    (Kiel Institute for the World Economy)

  • Strobl, Eric

    (University of Bern)

Abstract

Standard neo-classical trade theory predicts that trade liberalisation should cause a fall in wage inequality in developing countries through a decrease in the relative demand for skilled labour. Recent studies of a number of developing countries, however, find evidence to the contrary. Using a panel of manufacturing firms in the 1990s we investigate whether skillbiased technological change induced through imports of technology-intensive capital goods or export activity may provide an explanation for the increase in relative wages of skilled workers in Ghana. Estimates of a skilled worker relative demand equation based on a translog cost function show that changes in technology through a greater inflow of foreign machinery is found to be indeed consistent with skill-biased technological change in Ghana.

Suggested Citation

  • Görg, Holger & Strobl, Eric, 2002. "Relative Wages, Openness and Skill-Biased Technological Change," IZA Discussion Papers 596, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp596
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    References listed on IDEAS

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    More about this item

    Keywords

    wage inequality; trade liberalisation; skill-biased technological change;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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