Does Globalization Lower Wages and Export Jobs?

Globalization | Technology

Does Globalization Lower Wages and Export Jobs?

National Archives.gov.uk

by Matthew J. Slaughter and Phillip Swagel | International Monetary Fund

Globalization—the international integration of goods, technology, labor, and capital—is everywhere. Over the past twenty years, foreign trade and the cross-border movement of technology, labor, and capital have been massive and irresistible. During the same period, in the advanced industrial countries, the demand for more-skilled workers has increased at the expense of less-skilled workers, and the income gap between the two groups has grown.

There is no doubt that globalization has coincided with higher unemployment among the less skilled and with widening income inequality. But did it cause these phenomena, as many claim, or should we look to other factors, such as advances in technology? This paper seeks to answer that question.

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