Globalization, Technological Change and Labor Demand: A Firm Level Analysis for Turkey

25 Pages Posted: 2 Nov 2015

See all articles by Elena F. Meschi

Elena F. Meschi

University of Warwick - Centre for the Study of Globalisation and Regionalisation (CSGR); Università Politecnica delle Marche

Erol Taymaz

Middle East Technical University - Department of Economics

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano; IZA Institute of Labor Economics

Abstract

This paper studies the interlinked relationship between globalization and technological upgrading in affecting employment and wages of skilled and unskilled workers in a middle income developing country. It exploits a unique longitudinal firm‐level database that covers all manufacturing firms in Turkey over the 1992‐2001 period. Turkey is taken as an example of a developing economy that, in that period, had been technologically advancing and becoming increasingly integrated with the world market. The empirical analysis is performed at firm level within a dynamic framework using a 2 2 equations model that depicts the employment and wage trends for skilled and unskilled workers separately. In particular, the System Generalized Method of Moments (GMM‐SYS) procedure is applied to a panel dataset of about 15,000 firms. Our results confirm the theoretical expectation that developing countries face the phenomena of skill-biased technological change and skill‐enhancing trade, both leading to increasing the employment and wage gap between skilled and unskilled workers. In particular, a strong evidence of a relative skill bias emerges: both domestic and imported technologies increase the relative demand for skilled workers more than the demand for the unskilled. "Learning by exporting" also appears to have a relative skill biased impact, while FDI imply an absolute skill bias.

Keywords: skill‐biased technological change, international technology transfer, GMM‐SYS

JEL Classification: O33

Suggested Citation

Meschi, Elena F. and Taymaz, Erol and Vivarelli, Marco, Globalization, Technological Change and Labor Demand: A Firm Level Analysis for Turkey. IZA Discussion Paper No. 9453. Available at SSRN: https://ssrn.com/abstract=2684283

Elena F. Meschi (Contact Author)

University of Warwick - Centre for the Study of Globalisation and Regionalisation (CSGR) ( email )

Coventry CV4 7AL
United Kingdom

Università Politecnica delle Marche

Piazzale Martelli 8
Ancona, 18039
Italy

Erol Taymaz

Middle East Technical University - Department of Economics ( email )

Ankara, 06531
Turkey
+90312210 3034 (Phone)

HOME PAGE: http://www.metu.edu.tr/~etaymaz

Marco Vivarelli

Universita Cattolica del Sacro Cuore, Milano ( email )

Largo Gemelli 1
Milano, 20123
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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