ABSTRACT
Numerous studies have shown that the inequality of earnings has increased significantly in several western countries during the past twenty years. Several explanations have been put forth. Some emphasize the impact of the increased openness to international trade. This trend towards ‘globalization’ is usually explained by a decrease in transportation and communication costs and technology transfers which imply that goods may be imported at a lower price. Many of these goods in developed countries are produced by low-skilled labour so that the increased degree of trade openness will lead to a weaker demand for unskilled labour and hence a rise in the relative demand for skilled workers (see, for example, Freeman, 1995 and Wood, 1995). Other authors stress the importance of technological changes that tend to have been biased towards skilled workers (see, for example, Johnson, 1997 and Krueger, 1993).
