Globalization and Inter-occupational Inequality in a Panel of Countries: 1983-2003

1
Globalization and Inter-occupational Inequality
in a Panel of Countries 1983-2003

• Farzana Munshi
• Department of Economics
• University of Gothenburg, Sweden

2
Background

• Large interest on globalization, poverty and
  inequality.
• Globalization bring long-run benefits to
  participating countries.
• But globalization creates concern about
  distributional consequences.

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Background, contd

• Globalization has many dimensions.
• Openness to trade, the HOS prediction
• Openness to capital
• Outsourcing
• Immigration

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Background, contd

• Evidence of increased wage and income inequality
  in many developed countries.
• Mixed evidence for developing countries.
• Is globalization responsible?

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Background, contd

• Skilled-biased technical change (computerization,
  IT revolution)
• Labor market institution
• Informal sector
• Factor endowment
• Different data, methodology

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Purpose

• How does globalization (openness to trade
  capital) affect inter-occupational wage
  inequality within countries?

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Data/variable

• 52 countries,21 time series observations.
• Developed (15), Developing (37)
• Occupational wages from the OWW (Freeman and
  Oostendorp,2000).
• Country-occupation-time matrix 150
  countries,163 occupations, 21 years.

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Data/variable

• Occupational wage inequality
• ISCO-88, ISCED-76
• 34 occupations 19 skilled, 15 unskilled

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Econometric analysis

• Dependent variable- Relative wages
• Explanatory variables-
• Trade, FDI, GDP per capita, past relative wages
• Measure for technical change, supply effect not
  covered due to lack of data

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Econometric analysis

• Present result estimating several modelsOLS,
  fixed effects, 2SLS,GMM.
• Dynamic fixed effects preferable

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Results

• Openness to trade contributes to an increase in
  occupational wage inequality within developed
  countries, but effect diminishes with increased
  level of development.
• Openness to trade has insignificant impact on
  wage gap within developing countries.
• Openness to capital (FDI) has insignificant
  impact on either type of country.

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• Thank you!