Template-type: ReDIF-Paper 1.0
Author-Name: Lorenzo Rotunno
Author-Workplace-Name: Nuffield College and Blavatnik School of Government, University of Oxford
Author-Email:lorenzo.rotunno@bsg.ox.ac.uk

Author-Name: Adrian Wood
Author-Workplace-Name: Dept of International Development, University of Oxford
Author-Email: adrian.wood@qeh.ox.ac.uk
Title: Wages and endowments in a globalised world
Abstract: This paper explores empirically the relationship between relative wages and relative
endowments of skilled and unskilled workers in open economies across the world.
It reconciles different views about the role of national labour markets in wage
determination when countries trade. The observed sensitivity of relative wages to
variation in endowments in open economies, across countries and over time, is hard
to reconcile with the standard HOS model. By contrast, this sensitivity is intrinsic
to a more general (so labeled GHO) model in which, as shown by our results, the
wage-endowment elasticity depends on the height of barriers to trade and on the share
of wages in goods prices. In GHO, openness to trade reduces - rather than eliminates
- the sensitivity of wages to variation in endowments.
Classification-JEL: F11, F16.
Keywords: Heckscher-Ohlin, trade and wages, trade liberalisation
Length: 55 pages
Creation-Date: 2015-10-05
Number: 2015-W11
File-URL: https://www.nuffield.ox.ac.uk/economics/papers/2015/facprice_oct15.pdf
File-Format: application/pdf
Handle: RePEc:nuf:econwp:1511