Advanced International Trade – Theory and Evidence : [PDF Download]

PDF Title:Advanced International Trade
Author:Robert C. Feenstra
Publisher:Princeton University Press
Total Page:620 Pages
PDF Size:2.23 MB
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“Can we say anything about absolute rather than relative wages? Feenstra and Hanson (1996) explore this and conclude that while the relative wage of unskilled workers fall in both countries, their real wages need not fall.

Unskilled workers in the home country are the most disadvantaged by the outsourcing, but nevertheless, it is possible that they gain due to lower prices of the final good.

These results hold regardless of whether the increased outsourcing is due to a capital flow, as we have described, or due to a variety of other causes: growth in the capital endowments abroad, at a rate exceeding that at home; or simply technological progress abroad exceeding that at home.

In each of these cases, the comparative static effects are the same as we have just described.”

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