TY  - JOUR
AU  - Markusen,James R.
AU  - Venables,Anthony J.
TI  - Multinational Production, Skilled Labor and Real Wages
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5483
PY  - 1996
Y2  - March 1996
UR  - http://www.nber.org/papers/w5483
L1  - http://www.nber.org/papers/w5483.pdf
N1  - Author contact info:
James R. Markusen
Department of Economics
University of Colorado
Boulder, CO 80309-0256
Tel: 303/492-0748
Fax: 303/492-8960
E-Mail: james.markusen@colorado.edu

Anthony Venables
Department of Economics
University of Oxford
Manor Road Building
Manor Road
Oxford OX1 3UQ, United Kingdom
and CEPR
E-Mail: tony.venables@economics.ox.ac.uk
AB  - 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.
ER  -