Globalization and Employment:Imported Skill Biased Technological Changein Developing Countries

This paper discusses the impact of the international transfer of embodiedtechnological change on the employment evolution of skills in a sample of low andmiddle income countries (LMICs). A large body of literature has already underlinedthe occurrence of widening wage and employment differentials between skilledand unskilled workers in high-income countries (HICs) (Katz and Autor, 1999).Such empirical evidence is consistent with both trade- and technology-basedexplanations while these competing theoretical frameworks predict oppositeeffects on within- country inequality in LMICs. Recent analytical advancementshave found convergent elements between these two lines of research, especiallyin the prediction of the employment impact of technology transfer. However, asystematic lack of data in LMICs still hampers empirical research on thedeterminants of the witnessed increase in inequality in these economies.This paper provides a direct measure of technology transfer from HICs, that isfrom those economies which have already experienced the occurrence of skillbiasedtechnological change, to LMICs. GMM techniques are applied to an originalpanel dataset comprising 28 manufacturing sectors for 23 countries over adecade.Econometric results provide direct robust evidence of the absolute skill-bias effectof technology import in LMICs which, therefore, represents an importantdeterminant of the growing divide between skilled and unskilled workers in thesecountries....