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Saturday, September 02, 2006

Globalization, Productivity, and Wages

In response to a question about globalization's role in breaking the link between productivity and wages arising from his latest column, Paul Krugman says:

Surprise! The Rich Get Richer and . . ., Paul Krugman's Money Talks: ...There's a dispute about how much of a role international trade has played in the disconnect between productivity and wages; standard economic models say that trade has played some role, but not the dominant one. It's worth pointing out that Wal-Mart — to pick a non-random example — while it sells a lot of imports, must use U.S. workers to operate its stores, so it really isn't in a position to outsource. Nonetheless, it pays low wages and offers minimal benefits. That's not a conclusive proof that trade isn't the villain, but it's a reminder that stories about manufacturing don't easily generalize to the economy. (And imagine how different things would be if service workers were members of strong unions, received universal health care, etc.)...

    Posted by on Saturday, September 2, 2006 at 01:04 AM in Economics, Income Distribution, International Trade | Permalink  TrackBack (1)  Comments (16)


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    [Source: Economist's View] quoted: I usually don't like to get involved in the globalization, trade and productivity discussions, because I don't feel that even most of the economists really know what they are talking about, or (worse, sometimes) care ... [Read More]

    Tracked on Saturday, September 02, 2006 at 10:02 PM


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