Murphy and Welch (1991) and Borjas, Freeman, and Katz (1992) looked at the effects of increasing net US imports through the middle to late 1980s. Borjas, Freeman, and Katz examine factor demands for skill classes, defined by schooling, gender and work experiences. Whereas Murphy and Welch looked at factor demands for labour skills categories in four groups: traded durables, traded non-durables, and all non-traded goods and services. They both came to a similar conclusion that the changing factor content of trade moved the demand for labour against less skilled US workers for highly skilled workers.

Borjas, Freeman and Katz conclude that 8-15% of the 1980-1988 rise in high school wage differential is due to the effects of trade and new immigration into the US, the majority being due to trade alone. Approximately 26-67% of the increase in wage differential between school dropout and other groups of labour is due to trade and immigration, where about a third is due to trade.

←Back to Main Page