Trade, Technology and U.K. Wage Inequality

Haskel, Jonathan; Slaughter, Matthew J.

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Trade, Technology and U.K. Wage Inequality

NBER Working Paper No. w6978

37 Pages Posted: 22 Jun 1999 Last revised: 28 Jul 2022

See all articles by Jonathan Haskel

Jonathan Haskel

Imperial College Business School; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Matthew J. Slaughter

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Date Written: February 1999

Abstract

The U.K. skill premium fell from the 1950s to the late 1970s and then rose very sharply. This paper examines the contributions to these relative wage movements of international trade and technical change. We first measure trade as changes in product prices and technical change as TFP growth. Then we relate price and TFP changes to a set of underlying factors. Among a number of results, we find that changes in prices, not TFP, were the major force behind the rise in inequality in the 1980s. We also find that although increased trade pressure has raised technical change, its effect on wage inequality was not quantitatively significant.

Suggested Citation: Suggested Citation

Haskel, Jonathan and Slaughter, Matthew J., Trade, Technology and U.K. Wage Inequality (February 1999). NBER Working Paper No. w6978, Available at SSRN: https://ssrn.com/abstract=151592