Globalization and U.S. Wages ModifyingClassic Theory to.pdfVIP

Journal of Economic Perspectives—Volume 26, Number 2—Spring 2012—Pages 119–140 Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts Jonathan Haskel, Robert Z. Lawrence, Edward E. Leamer, and Matthew J. Slaughter hhee l lastast 1010 toto 1515 y yearsears h haveave seenseen dramaticdramatic changeschanges i inn globalizationglobalization andand ttechnology juxtaposed with dramatic changes in U.S. earnings: Have theechnology j uxtaposed with dramatic changes in U.S. earnings: Have the TTfformer been driving the latter? Back in the mid-1990s, most research foundormer been driving the latter? Back in the mid- 1990s, most research found tthat the effect of trade on U.S. wages was relatively minor; for example, this washat the effect of trade on U.S. wages was relatively minor; for example, this was tthehe tenortenor o off a a three-paperthree-paper s symposiumymposium o onn “Income“Income I Inequalitynequality a andnd T Trade”rade” i inn thethe SSummer 1995 issue of this journal. But since the mid-1990s, globalization has takenummer 1995 issue of thisj ournal. But since the mid- 1990s, globalization has taken ssome new forms: China, for example, was barely on the global economic map inome new forms: China, for example, was barely on the global economic map in 11995. The patterns of inequality and wages have taken new forms, too. Thus, earlier995. The patterns of inequality and wages have taken new forms, too. Thus, earlier cconclusions are being reconsidered. For example, Nobel laureate Paul Krugmanonclusions are being reconsidered. For example, Nobel laureate Paul Krugman hhad found in his earlier research on trade and wages, like most others, that thead found in his earlier research on trade and wages, like most others, that the iimpact of trade on U.S. earnings had been small. But in Krugman (2008), he nowmpact of trade on U.S. e