U.S. Trade with Developing Countries and Wage Inequality

Jeffrey D. Sachs; Howard J. Shatz

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U.S. Trade with Developing Countries and Wage Inequality
Sachs, Jeffrey D.
Shatz, Howard J.
Earth Institute
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American Economic Review
Since the mid-to-late 1970's, wage inequality between low- and highly educated workers has widened markedly. The wage premium to a college education compared with a high-school education has increased by some 20 percentage points (see George J. Borjas and Valerie A. Ramey [1994] for recent estimates). Part of the explanation seems to lie with a slowdown in the growth of supply of highly educated workers in the 1980's. Another part seems to lie with a demand shift toward educated workers. Two hypotheses have been advanced to account for the alleged demand shift. The first holds that technological change has been biased in favor of high-education workers. The second holds that growing international trade with low-wage countries has shifted labor-market demand in the United States away from low-educated workers, as the United States increasingly imports goods produced by such workers from low-wage countries.
Economics, Labor
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Suggested Citation:
Jeffrey D. Sachs, Howard J. Shatz, 1996, U.S. Trade with Developing Countries and Wage Inequality, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:8355.

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