IZA DP No. 324: Trade, Technology and Labour Markets: Empirical Controversies in the Light of the Jones Model
published in: Journal of Economic Integration, 2004, 19 (1), 79-112
The deterioration of the income and employment position of unskilled workers in the OECD area since the 1980s is a well-documented fact. The debate about the causes of this development is dominated by two competing hypotheses, "North-South Trade" or "globalisation" and technological progress. Several empirical strategies have been used to identify the importance of technological and globalisation shocks: factor content analyses, consistency checks, regression analyses and numerical methods. However, no consensus has been achieved so far and there is considerable methodological controversy. This paper uses the Jones model as theoretical backbone to identify and settle the sources of disagreement, to consolidate recent results, to derive new insights and to provide an integrative assessment of the different empirical strategies.