Citation

Discussion Paper Details

Please find the details for DP1992 in an easy to copy and paste format below:

Full Details

Title: Globalization and European Labour Markets

Author(s): Michael C Burda and Barbara Dluhosch

Publication Date: October 1998

Keyword(s): European Labour Markets, International Trade, organization of production, Services, technology choice and vertical division of labour

Programme Area(s): International Trade and Regional Economics and Labour Economics

Abstract: This paper examines the linkage between trade and the dismal state of labour markets in Europe. On the face of superficial evidence, the nexus is weak and is overshadowed by more compelling evidence of skill-biased technical change. Yet a complete dismissal of globalization is inconsistent with current opinions of businessmen, policy-makers and workers in globalized industries. We propose an alternative model in which globalization - defined as the increase in world trade relative to other indicators of real economic activity - occurs along with deterioration of labour market prospects, especially for the less-skilled. As an alternative or complement to conventional trade and technology explanations, we model both the fragmentation of production and resulting reallocation of economic activity across national boundaries as equilibrium responses to trading opportunities as well as the technology of production. Increasing integration is therefore linked to both trade as well as pervasive skill-biased technical change. The model's predictions are consistent with a number of outstanding empirical puzzles in the trade-wages debate and can also explain the bimodal growth in services (high and low skill) observed in all OECD countries, and especially those with deregulated labour markets.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1992

Bibliographic Reference

Burda, M and Dluhosch, B. 1998. 'Globalization and European Labour Markets'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1992