Trade, technology and labour markets in the world economy, 1970-90: A computable general equilibrium analysis

Whether the plight of OECD unskilled labour is due to trade or technology is examined with a general equilibrium Heckscher-Ohlin calibrated model of North and South. Technology transfer from North to South via direct foreign investment in unskilled-labour-intensive manufacturing industries is identified as the trade shock. Simulations are carried out for this and other relevant shocks, and compared with the face of the 1970-90 period. Weights on the shocks are selected by least squares. It is found that the roles of trade and technology in the plight of Northern unskilled labour are roughly equal.