Labour Markets, Trade and Technological Progress: A Meta-Study

Abstract

Theoretical models, supported by empirical evidence, suggest that technological progress and trade are two essential factors to explain recent labor market developments in many OECD countries; technology can make jobs obsolete, and import competition can drive firms out of business. Both causes are often mentioned in tandem, but their relative contribution is unclear. This meta-analysis disentangles the interplay between technology and trade regarding recent labor market developments. Using a sample of some 623 technology and 1094 trade elasticities from 91 studies, our meta-analysis first reveals that despite small publication selection, technology and trade benefit both wages and employment in a statistically significant and economically meaningful way. Nevertheless, the multivariate meta-regression analysis indicates that this conclusion is conditional on several research dimensions. In the most prominent outcome, we document that the skill-bias impact from technology is concentrated on employment, where high-skilled workers benefit relatively more compared to low-skilled ones. In contrast, trade effects expand over both wages and employment, but mainly benefit high-skilled workers. Taken together, the current analysis sheds light into how globalization favors especially high-skilled workers in industrialized labor markets.

Keywords: labour markets, technological progress, trade, meta-study

JEL Classification: F160, J310, O110