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With reference to India and Mexico; a study.
Over the past two decades, the percentage of the world’s population living on less than a dollar a day has been cut in half. How much of that improvement is because of—or in spite of—globalization? While anti-globalization activists mount loud critiques and the media report breathlessly on globalization’s perils and promises, economists have largely remained silent, in part because of an entrenched institutional divide between those who study poverty and those who study trade and finance. Globalization and Poverty bridges that gap, bringing together experts on both international trade and poverty to provide a detailed view of the effects of globalization on the poor in developing nations, answering such questions as: Do lower import tariffs improve the lives of the poor? Has increased financial integration led to more or less poverty? How have the poor fared during various currency crises? Does food aid hurt or help the poor? Poverty, the contributors show here, has been used as a popular and convenient catchphrase by parties on both sides of the globalization debate to further their respective arguments. Globalization and Poverty provides the more nuanced understanding necessary to move that debate beyond the slogans.
This paper examines the effect of globalization on labor markets in the advanced economies, focusing particularly on the claim that increased economic integration has widened the gap between the wages of more skilled and less skilled workers. The broad consensus of research is that globalization, both in terms of increased trade as well as increased capital mobility and foreign direct investment, has had only a modest effect on wages. Instead, changes in technology have led to a pervasive shift in demand for labor that has favored skilled workers to the detriment of less skilled workers.
The distributional effects of globalization on income have been one of the most important issues in international trade. Whether globalization is one of the explanations of the increasing wage inequality in both developing and developed countries or not has been a debate since 1990s. My dissertation investigates this topic from three aspects: who does trade affect between-group inequality through firm training, market potential and cross-country income, openness and within-group wage inequality. The first chapter incorporates firm-specific training into a recent framework of search model developed by Helpman, Itskhoki and Redding (2010) with heterogeneous firms and two types of workers. More productive firms hire workers with higher average learning ability, invest more on training both skilled and unskilled workers, hire relatively more skilled workers and pay relatively higher wages to skilled workers. Exporting increases wage and training received by workers in a firm with given productivity. For each type of worker, training inequality and wage inequality moves together after opening to trade. Empirical evidence based on firm- and worker-level data is also provided to support model predictions. The second chapter challenges the traditional belief that the US labor productivity advantage in the late 19th century should be attributed to its large domestic market. We assess whether a more general measure of "market access" mattered for the US position in the cross-country distribution of income per capita between 1900 and 1910. After constructing market access measures for 25 countries based on a general equilibrium model of production and trade, the US does not have an overall lead in market access matching its rank in the income distribution. France, Germany and the UK appear to have larger domestic markets than the US. Still, market access does correlate positively with income per capita in the broader sample. We then simulate a general equilibrium trade model with trade costs and provide a calculation of the welfare gains from removing international borders. The largest European countries could not have closed their gap with the US with higher market potential. On the other hand, many small countries could have done so. While market access may not have been crucial for explaining US success, it was an important determinant of real incomes for the most advanced small open-economies. The third chapter provides evidence on the relationship between within-group wage inequality and the degree of openness. One of the key predictions from the theoretical model in Helpman, Itskhoki and Redding (2010) is that there is a non-monotonic relationship between within-group wage inequality and openness, depending on the fraction of exporting firms. In this chapter, I propose a way to test this prediction by constructing a panel data including around 50 manufacturing industries over 34 years. The residuals from Mincer regression is used to calculate within-group wage inequality index. The preliminary results are consistent with these theoretical predictions.
Demonstrates that the free flow of goods, capital, and labor has increased the inequality or volatility of labor earnings in advanced industrial societies, while constraining governments' ability to tax the winners to compensate the workers for their loss. This book looks at how globalization affects policies aimed at reducing inequalities.
Since the early 1990s, most developing economies have become more integrated with the world s economy. Trade and foreign investment barriers have been progressively lifted and international trade agreements signed. These reforms have led to important changes in the structures of these economies. The labor markets have adjusted to these major changes, and workers were required to adapt to them in one way or another. In 2006, the Social Protection Unit of the World Bank launched an important research program to understand the impact that these profound structural changes have had on workers in developing countries. 'Globalization, Wages, and the Quality of Jobs: Five Country Studies' presents the findings and insights of this important research program. In particular, the authors present the similar experiences of low-income countries with globalization and suggest that low-income countries working conditions have improved in the sectors exposed to globalization. However, 'Globalization, Wages, and the Quality of Jobs' also highlights concerns about the sustainability of these improvements and that the positive demonstration effects on the rest of the economy are unclear. The empirical literature that exists, although vast, does not lead to a consensus view on globalization s eventual impact on labor markets. Understanding the effects of globalization is crucial for governments concerned about employment, working conditions, and ultimately, poverty reduction. Beyond job creation, improving the quality of those jobs is an essential condition for achieving poverty reduction. 'Globalization, Wages, and the Quality of Jobs' adds to the existing literature in two ways. First, the authors provide a comprehensive literature review on the current wisdom on globalization and present a micro-based framework for analyzing globalization and working conditions in developing countries. Second, the authors apply this framework to five developing countries: Cambodia, El Salvador, Honduras, Indonesia, and Madagascar. This volume will be of interest to government policy makers, trade officials, and others working to expand the benefits of globalization to developing countries.