TY  - JOUR
AU  - Abrego,Lisandro
AU  - Whalley,John
TI  - The Choice of Structural Model in Trade-Wages Decompositions
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7312
PY  - 1999
Y2  - August 1999
UR  - http://www.nber.org/papers/w7312
L1  - http://www.nber.org/papers/w7312.pdf
N1  - Author contact info:
John Whalley
Department of Economics
Social Science Centre
University of Western Ontario
London, ON N6A 5C2
CANADA
Tel: 519/661-3509
Fax: 519/661-3666
E-Mail: jwhalley@uwo.ca
AB  - This paper explores the use of structural models as an alternative to reduced form methods when decomposing observed joint trade and technology driven wage changes into components attributable to each source. Conventional mobile factors Heckscher-Ohlin models typically reveal problems of specialisation unless price changes accompanying trade shocks are small, and can also produce wide ranges for the decomposition for parameterisations consistent with the joint change. A differentiated goods model which generalises Heckscher-Ohlin removes problems of specialisation and concentrates the range of decompositions more narrowly, but introduces larger demand side responses to trade shocks which greatly reduce the effect of trade. The conclusion offered is that the choice of structural model matters for decomposing observed wage changes into trade and technology components, and that reduced-form methods which do not discriminate between alternative structural models may not be that informative for such decompositions.
ER  -