Working Paper Series, Department of Economics, Copenhagen Business School
Michael Rosholm, Christian Scheuer and Anders Sørensen
The Implications of Globalization for Firms? Demand for Skilled and Unskilled Labor
Abstract: This paper investigates the impact of globalization, in
the sense of increasing international trade, on the demand for skills in
Danish manufacturing companies. The study is based on a unique data set
that enables us to develop rich measures of international outsourcing and
import penetration. Moreover, the data also allows several strategies to
strengthen the causal interpretation of our results. The main finding of
the analysis is that it is of crucial importance to distinguish imports -
both in the form of outsourcing and overall imports - by country-of-origin.
We find that international trade with low-wage countries leads to
skill-upgrading. This is especially pronounced for import penetration with
a ceteris paribus contribution of around fifty percent to skill-upgrading.
Moreover, we find that import penetration in goods originating from
high-wage countries lead to skill-downgrading. This latter result suggests
that Danish manufacturing has comparative advantage in skill intensive
production when compared to low-wage countries, but in unskill-intensive
production when compared to high-wage countries. Skill-upgrading, Low-wage
country outsourcing, Low-wage country import penetration, Comparative
Keywords: na; (follow links to similar papers)
JEL-Codes: G10; (follow links to similar papers)
23 pages, January 1, 2007
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