This book presents an integrated overview and evidence, taking Japan as
an example, on how international trade, especially with developing
countries, affects labor market in developed countries, which has been
keenly debated among international and labor economists since the late
1980s. The unique point of this book is that it integrates international
trade and labor market into the same framework. The analysis includes
both theory and empirical study. It especially pays attention to wage
inequality between skilled and unskilled labor represented by
nonproduction and production workers, and college graduates and
high-school graduates. The estimation method used is to analyze
input-output tables containing 55 manufacturing industries during the
period 1995-2005, and to measure factor content of trade using these
tables.
Main results are as follows: First, both relative wage and relative
employment of nonproduction to production workers, and college graduates
to high-school graduates increased as a trend since the 1980s,
suggesting a relative demand shift toward skilled labor. Second,
analysis using input-output tables revealed that employment reduction
due to increased imports is greater in production workers than in
nonproduction workers, and that employment increase due to increased
exports is greater in nonproduction workers than in production workers,
suggesting the comparative advantage being at work in line with the
Heckscher-Ohlin-Samuelson model. Third, analysis using factor content of
trade revealed that increased trade during 1995-2005 especially with
Asian countries raised the relative wage of nonproduction to production
workers in the aggregated manufacturing sector by 0.023 points (1.400 to
1.422), or by 1.6 percent in terms of rate of change. This estimation
result suggests that increased trade in this period played a certain
role in widening wage inequality between nonproduction to production
workers. These results contribute to a deeper understanding of the
effect of globalization on labor market in the field of economics.
