@techreport{NBERw5483,
 title = "Multinational Production, Skilled Labor and Real Wages",
 author = "James R. Markusen and Anthony J. Venables",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "5483",
 year = "1996",
 month = "March",
 URL = "http://www.nber.org/papers/w5483",
 abstract = {Adapting our earlier model of multinationals, we address policy issues involving wages and labor skills.  Multinational firms may arise endogenously, exporting their firm-specific knowledge capital to foreign production facilities, and geographically fragmenting production into skilled and unskilled-labor-intensive activities. Multinationals thus alter the nature of trade, from trade in goods (produced with both skilled and unskilled labor) to trade in skilled- labor-intensive producer services.  Results shed light on several policy questions.  First, multinationals increase the skilled/unskilled wage gap in the high income country and, under some circumstances, in the low income country as well.  Second, there is a sense in which multinationals export low skilled jobs to the lower income country.  Third, trade barriers do not protect unskilled labor in the high income countries.  By inducing a regime shift to multinationals, trade barriers protect the abundant factor, at least in the high income country and possibly in both countries.  Fourth, a convergence in country characteristics induces the entry of multinationals and raises the skilled-unskilled wage gap in the initially large and skilled-labor-abundant country, and possibly in the small skilled-labor-scarce country as well.},
}