Globalisation and the skills bias of world trade

The latest edition of the Economic Journal contains new research by Paolo Epifani and Gino Gancia that focuses on the skills preium for highly skilled workers in an age of globalisation. Whilst increasing economic integration between countries has undoubtedly contributed to a process of income convergence across nations, one of the paradoxes it that it can also lead to greater pay and earnings inequalities within countries - this research helps to explain why.

“Since the mid-1970s, the wage gap between high-skilled and low-skilled workers has widened. At the same time, world trade has increased dramatically: between 1980 and the late 1990s, the share of countries ‘open to trade’ rose from 35% to 95%, and the volume of trade of the average country rose from 59% of national income to 74%....Globalisation increases the size of the market firms can access. Some industries can take advantage of a larger market more easily than others as they benefit from ‘economies of scale’.The study argues that those industries that take advantage of a larger market are more likely to employ skilled workers, and so the wages of skilled workers will rise faster than unskilled workers in a period of globalisation.”

The rest of the media briefing on this new research is available here

Economics Explained, by Evan [12 Feb 2012]
Unit 2 Macro: China’s Trade Engine is Spluttering [10 Feb 2012]
Unit 4 Macro: Focus on India - Comparative Advantage [27 Jan 2012]
Unit 2 Macro: Focus on China - Trade and Growth [27 Jan 2012]
Unit 1 Micro: Can the UK Computer Games Industry Grow [24 Jan 2012]
Unit 4 Macro: Focus on India - Economic Growth [24 Jan 2012]
Unit 2 Macro: Exporting to the Booming Chinese Economy [23 Jan 2012]
Video Resources on Rising Inequality [23 Jan 2012]
France and Flexible Employment [22 Jan 2012]
Unit 4 Macro: Russia Joins the WTO [22 Jan 2012]
Unit1 Micro: Can a minimum wage create jobs? [16 Jan 2012]
Unit 2 Macro: Frontier Markets - the New BRICS? [15 Jan 2012]
Beyond the Bike - The Importance of Remittances [15 Jan 2012]
Unit 4 Macro: Competitive Advantage in Trade (Some Videos) [12 Jan 2012]
Unit 4 Macro: UK Trade Patterns [11 Jan 2012]
Economics at the Movies - Freakonomics [9 Jan 2012]
Unit 1 Micro: Low Cost Airlines Beat the Recession [1 Jan 2012]
Unit 2 Macro: Brazil Overtakes UK in Economic Size [26 Dec 2011]
Unit 4 Macro: Human Capital and Economic Growth [23 Dec 2011]
Great Blog to Follow - Joseph Rowntree Foundation [22 Dec 2011]
Great Economics Blog to Follow - Danny Quah [15 Dec 2011]
Behavioural Economics: Herd Behaviour [28 Nov 2011]
Jim O’Neill - The Growth Map: Economic Opportunity in the BRICs and Beyond [22 Nov 2011]
Beyond the Bike - The Value of Money [19 Nov 2011]
Cartoon on inequality - perfect for explaining analysis and evaluation! [16 Nov 2011]
Unit 2 Macro: Should the EU introduce a Tobin Tax? [14 Nov 2011]
AS Macro: The State of British Business [13 Nov 2011]
Economics Resources - Week Ended 6 November 2011 [6 Nov 2011]
Unit 2 Macro: Video Clips on Unemployment [6 Nov 2011]
Unit 4 Macro: China and India - Notes from Martin Wolf [6 Nov 2011]
Unit 3 Micro: Time of Use Pricing for Energy [2 Nov 2011]
Unit 4 Macro: Should TNCs make full disclosure on factory wages? [30 Oct 2011]
Unit 3 Micro: UK Executive Pay - All in it Together? [29 Oct 2011]
Tour of the US income distribution – “The L Curve” [25 Oct 2011]
Unit 3 Micro: Drop Box and Freemium [18 Oct 2011]
Can the “invisible hand” solve Africa’s poverty? [13 Oct 2011]
Unit 2 Macro: Can Exports Drive a Recovery? [13 Oct 2011]
Unit 4 Macro: Unit Labour Costs and Inflation [12 Oct 2011]
Skidelsky in Madrid [12 Oct 2011]
Unit 3 Micro: Monospony Power and Low Wages in Care Homes [3 Oct 2011]
Unit 3 Micro: Tube Drivers set to earn £50,000 a year [3 Oct 2011]
NMW: Classical real-wage unemployment [3 Oct 2011]
Unit 4 Macro: When China Met Africa [1 Oct 2011]
Unit 4 Macro: EU proposes a “Tobin Tax” [28 Sep 2011]
Unit 4 Macro: Bangladesh and Comparative Advantage in Textiles [19 Sep 2011]
Unit 2 Macro: Economic Growth and Inequality [14 Sep 2011]
Unit 2 Macro: Income and Wealth in the UK [12 Sep 2011]
Unit 4 Macro: Progress towards Millennium Goals [12 Sep 2011]
Unit 4 Macro: Inequality and Development [12 Sep 2011]
Starter Video: The Slums of Manilla [11 Sep 2011]
50% tax rates - Chuck it George [7 Sep 2011]
Slicing up the Apple - globalisation graphic [22 Aug 2011]
Unit 4 Macro: Baltic Dry Index and Global Weakening [19 Aug 2011]
A surprising example of trade between the USA, China, and Korea. [19 Jul 2011]
Unit 4 Macro: Dangers of High Inflation [11 Jul 2011]
Unit 3 Micro: Oligopsony - Dairy Losses Drive Farmers from the Fields [10 Jul 2011]
UK firms wake up to Brazilian opportunities [21 Jun 2011]
Evan Davis ‘Made in Britain’ - and a new trade data tool to play with [21 Jun 2011]
AQA ECON4 Context [20 Jun 2011]
Six Global Trends Shaping Business Strategy [15 Jun 2011]
Not so much food inflation, but food hyperinflation! [30 May 2011]
Invisible Exports - Originating Journalist is remembered [27 May 2011]
Macro Revision: Putting Things in Context [25 May 2011]
AS Macro Key Term: Supply-Side Policies [25 May 2011]
AS Macro Key Term: Cost Push Inflation [24 May 2011]
AS Macro Key Term: Inflation [24 May 2011]
AS Macro Key Term: Recession [23 May 2011]
AQA A2 Economics - European Context [23 May 2011]
A2 Micro:  Monopsony Power in Markets [19 May 2011]
A2 Micro: High and Low Marginal Cost Products [19 May 2011]
A2 Micro: Ownership and Control in Modern Businesses [18 May 2011]
AS economics: Using the cost-benefit principle [18 May 2011]
A2 Macro: Revealed Advantage [12 May 2011]
Video Clips on the Chinese Economy [1 May 2011]
UK Economy at a Glance April 2011 [17 Apr 2011]
AS Macro Key Term: Real Disposable Income [11 Apr 2011]
UK Minimum Wage rises by 2.5% in October 2011 [8 Apr 2011]
AS Macro Key Term: Economic Structure [6 Apr 2011]
AS Macro Key Term: Fiscal Austerity [6 Apr 2011]
AS Macro Key Term:  Balance of Payments [6 Apr 2011]
Information Failures: Tesco and Second Hand Cars [3 Apr 2011]
AS Macro Key Term: Current Account Deficit [2 Apr 2011]
AS Micro Revision: Banana Prices [1 Apr 2011]
OCR F585 June 2011: Competitiveness [31 Mar 2011]
Pacific Peso Reaches 29 Year High! [30 Mar 2011]
The New North - Population Shift [23 Mar 2011]
Keeping Track of UK Macro Objectives [18 Mar 2011]
Focus on Spain [16 Mar 2011]
Global supply chain threatened by Japanese disaster [16 Mar 2011]
Timetric: UK Balance of Trade with China [13 Mar 2011]
Dambisa Moyo - How the West was Lost [11 Mar 2011]
Video Resources on UK Relative Poverty [7 Mar 2011]
Timetric: UK Balance of Trade in Oil [6 Mar 2011]
Timetric: Trade Balance in Manufactured Goods [4 Mar 2011]
Timetric: UK Trade in Goods and Services [3 Mar 2011]
Tony Atkinson on Inequality - LSE Lecture Notes [1 Mar 2011]
EU Economics: Germany leads Euro Zone revival [25 Feb 2011]
Protectionism and the demise of the US shipping industry [24 Feb 2011]
Combining monetary and fiscal policy to curb inflation in China [16 Feb 2011]
Unemployment in Germany and Spain [14 Feb 2011]

ECONOMICS TEACHER RESOURCE NEWSLETTER

Join over 6,000 other Economics Teachers in the UK and around the world who receive the tutor2u regular Economics Resource Email Newsletter. Get special offers, first news of latest resources, teaching ideas, conferences and workshops + loads of great ideas for teaching economics from our blog authors.