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2013 | OriginalPaper | Chapter

5. Globalization and Labour Markets

Author : Ranajoy Bhattacharyya

Published in: Development and Sustainability

Publisher: Springer India

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Abstract

In recent times, both income inequality and the level of globalisation have been rising rapidly across most parts of the world. The obvious question to ask is: is this pure coincidence or are the two causally related? To answer this question one needs three things: A theoretical argument that links the two observations, a methodology for empirically implementing the theoretical argument and of course reliable data. This chapter is about the ways in which existing research has attempted to implement these steps in order to answer the above question.

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previous chapter Volatility, Long Memory, and Chaos: A Discussion on some “Stylized Facts” in Financial Markets with a Focus on High Frequency Data

next chapter Production Performance of Indian Agriculture in the Era of Economic Reforms

The discussion below follows the literature in defining income inequality by only looking at a broad feature associated with it: the relative income of high wage earners to low wage earners. In the literature ‘High wage earners’ and “low wage earners’ have often been referred to ‘skilled workers’ and ‘unskilled workers’ or ‘white collar workers’ and ‘blue collar workers’ or even ‘production workers’ and ‘managers’. We will however simply assume that there is a cut off income below which a worker is called ‘low wage’ and above which ‘high wage’. The cut off income is assumed to be equivalently defined in terms of skill. Low skill workers earning low wages and highly skilled workers earning high wages.

See Dorfman et al. (1958) Chaps. 2 and 3 and Dixit and Norman (1980) Chap. 2.

I am deeply indebted to an anonymous referee for pointing this out to me.

Note that with (5.6) (5.1) and (5.2) are no more linear programming exercises.

Note that in a small open economy only the sector bias of technology change matters for relative wages as opposed to the factor bias but for outsourcing only factor bias so outsourcing has no effect in a small open economy,.

Figure can be drawn by the reader.

Research support from the Asian Scholarship Foundation, Bangkok, is gratefully acknowledged. I am indebted to Jong Eun Lee for discussions. I am also deep; y indebted to Se Kwon Joo for research assistance.

The Wage Structure Survey reports wages of males, females and total. Throughout this section we have used the figures reported under ‘total’.

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Title: Globalization and Labour Markets
Author: Ranajoy Bhattacharyya
Publisher: Springer India
Book: Development and Sustainability
Print ISBN: 978-81-322-1123-5

Electronic ISBN: 978-81-322-1124-2

Copyright Year: 2013
DOI: https://doi.org/10.1007/978-81-322-1124-2_5