TY  - JOUR
AU  - Katz,Lawrence F.
AU  - Summers,Lawrence H.
TI  - Can Inter-Industry Wage Differentials Justify Strategic Trade Policy?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2739
PY  - 1989
Y2  - November 1989
UR  - http://www.nber.org/papers/w2739
L1  - http://www.nber.org/papers/w2739.pdf
N1  - Author contact info:
Lawrence F. Katz
Department of Economics
Harvard University
Cambridge, MA  02138
Tel: 617/495-5148
Fax: 617/613-1245
E-Mail: lkatz@harvard.edu

Lawrence H. Summers
Harvard Kennedy School of Government
79 JFK Street
Cambridge, MA 02138
Tel: 617/495-9322
Fax: 617/495-0436
E-Mail: lhs@harvard.edu
M1  - published as Lawrence F. Katz, Lawrence H. Summers. "Can Interindustry Wage Differentials Justify Strategic Trade Policy?," in Robert C. Feenstra, editor, "Trade Policies for International Competitiveness" University of Chicago Press (1989)

AB  - This paper examines the relationship between labor market imperfections and trade policies. The available evidence suggests that pervasive industry wage differentials of up to 20 percent remain even after controlling for differences in observed measures of workers' skill and the effects of unions. Theoretical analysis indicates that given non-competitive wage differentials of this magnitude policies directed at encouraging employment in high-wage sectors could significantly enhance allocative efficiency. For the United States and other developed countries, such policies are more likely to involve export promotion than import substitution. Increased international trade flows (at least through 1984) have been associated with increased employment in high-wage U.S. manufacturing industries relative to low-wage U.S. manufacturing industries.
ER  -