Review of World Economics

, Volume 152, Issue 4, pp 655–680 | Cite as

Globalization, technological change and labor demand: a firm-level analysis for Turkey

Original Paper

Abstract

This paper studies the interlinked relationship between globalization and technological upgrading in affecting employment and wages of skilled and unskilled workers in a middle income developing country. It exploits a unique longitudinal firm-level database that covers all manufacturing firms in Turkey over the 1992–2001 period. Turkey is taken as an example of a developing economy that, in that period, had been technologically advancing and becoming increasingly integrated with the world market. The empirical analysis is performed at firm level within a dynamic framework using a model that depicts the employment and wage trends for skilled and unskilled workers separately. In particular, the System Generalized Method of Moments (GMM-SYS) procedure is applied to a panel dataset of about 15,000 firms. Our results confirm the theoretical expectation that developing countries face the phenomena of skill-biased technological change and skill-enhancing trade, both leading to increasing the employment and wage gap between skilled and unskilled workers. In particular, a strong evidence of a relative skill bias emerges: both domestic and imported technologies increase the relative demand for skilled workers more than the demand for the unskilled. “Learning by exporting” also appears to have a relative skill- biased impact, while FDI imply an absolute skill bias.

Keywords

Skill-biased technological change International technology transfer GMM-SYS 

JEL Classification

O33 

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Copyright information

© Kiel Institute 2016

Authors and Affiliations

  1. 1.Department of EconomicsCa Foscari University of VeniceVeniceItaly
  2. 2.Department of EconomicsMiddle East Technical UniversityAnkaraTurkey
  3. 3.Istituto di Politica EconomicaUniversità Cattolica del Sacro CuoreMilanItaly
  4. 4.Institute for the Study of Labor (IZA)BonnGermany

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