The Dynamic Effects of Export and Technological Changes on Relative Wages

Authors

Department of Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

Abstract

he links among trade, technological changes, and worker earnings have been the subject of intense research during the past few decades. The current literature on this subject shows that trade liberalization and technological changes are the main drivers of demand for skilled workers and a rise in the wage premium. In the present article, a panel of 134 Iranian manufacturing industries over the period 2004-2013 and System GMM estimator was used to examine the effect of export(as a proxy for trade) and technological changes on relative wages in high-tech and non-high-tech industries. Our findings show that the estimates are affected by a strong path-dependency in relative wages of both subgroups. Moreover, the education, capital-labor ratio, and total factor productivity (TFP) have a positive and significant impact on relative wages in both groups of the industries. Nevertheless, these variables are more effective in high-tech industries rather than non-high-tech ones. Finally, firms’ decision for entering into international markets puts a positive effect on labors’ earning. While to increase the market share, firms have to cover the trade costs by adjusting the cost of production factors such as labor force or capital.
 

Keywords


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