The Effect of Technology and Trade on Wage Differentials between Nonproduction and Production Workers in Canadian Manufacturing

Statistics Canada Working Paper No. 98

47 Pages Posted: 7 Jul 1999

See all articles by John R. Baldwin

John R. Baldwin

Statistics Canada - Microeconomic Analysis Division

Mohammed Rafiquzzaman

Industry Canada

Date Written: May 1998

Abstract

The 1980s and 1990s have seen a rising share of skilled labor in total employment in the manufacturing sector of Canada. At the same time, the wage premium for skilled workers has increased, thereby increasing the inequality between skilled and unskilled workers. There is a disagreement about the causes of these changes. Several hypotheses have been offered to explain them--increased international competition, changes in the relative supply of more-skilled versus less-skilled workers, and skilled-augmenting technological change. This paper analyzes the nature, pattern and causes of the shifts in the composition of employment in manufacturing. The paper describes the composition of employment in manufacturing. It focuses on the direction and magnitude of shifts in the proportion of nonproduction workers employed within manufacturing and across sectors within manufacturing. It also investigates the extent to which wage differentials between nonproduction and production workers have widened in the 1980s. In addition, it assesses the extent to which these changes are associated with trade and technology use. The results indicate that the rising wage differentials are associated with both increased trade intensity and the types of technologies that are being used in the plant.

JEL Classification: J31

Suggested Citation

Baldwin, John R. and Rafiquzzaman, Mohammed, The Effect of Technology and Trade on Wage Differentials between Nonproduction and Production Workers in Canadian Manufacturing (May 1998). Statistics Canada Working Paper No. 98, Available at SSRN: https://ssrn.com/abstract=155830 or http://dx.doi.org/10.2139/ssrn.155830

John R. Baldwin (Contact Author)

Statistics Canada - Microeconomic Analysis Division ( email )

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Mohammed Rafiquzzaman

Industry Canada ( email )

235 Queen Street
Ottawa, Ontario K1A 0H5
Canada
613-995-0501 (Phone)

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