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Does globalization participate in the French within-industry shift away from unskilled workers?

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Globalization is often seen as responsible for the observed widening income distribution in industrialized countries. In this empirical paper, the author shows that a decrease in trade costs (globalization) modifies the international structure of production toward vertical specialization. Industries vertically specialize when different stages of production locate in different countries. By shifting relative labor demand across countries, vertical specialization may increase skilled-unskilled inequality. The author hence evaluates its contribution in explaining the observed within-industry shift away from unskilled workers in France. Using input - output tables and labor data, she finds that vertical specialization - defined as the share of imported inputs in production - rose from 9% in 1977 to 14% in 1993. Further estimations show that vertical specialization contributed from 11% to 15% of the decline in the share of unskilled workers in French manufacturing employment for the 1977-1985 period and for a fourth of the 1985-1993 period.

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en

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2002/2002-113.pdf

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Copyright INSEAD. All rights reserved