Resumen de Wage Inequality and Globalisation: What can we Learn from the Past? A General Equilibrium Approach

Concha Betrán Pérez, Javier Ferri Carreres, María Angeles Pons Brías

• The current era of globalisation has witnessed a rising premium paid to skilled workers resulting in increasing wage inequality in most OECD countries. This pattern differs from that observed during the past globalisation period (1880-1913), in which wage inequality steadily decreased in most of the Old World countries. The present debate over wage inequality focuses on the implications of globalisation, technological change, the role of labour market institutions and education. Similar factors took place in the past globalisation process. In order to disentangle the main factors that contribute to wage inequality, we calibrate a general equilibrium model for the UK economy in the past globalisation period. The results show that a trade shock and a skilled-biased technology shock increased wage inequality. However, education, emigration and capital accumulation had a more significant impact and led to a decrease in wage inequality.