ABSTRACT
Much attention has understandably been focused on the relationship between commodity trade and labour market outcomes. Gaston and Nelson (1998) survey the state of play on that controversial issue and conclude that trade liberalisation may very well have contributed to the increasing wage dispersion observed during the 1980s, particularly in countries such as the United States and the United Kingdom. The increased globalisation may have also contributed to the unemployment problems experienced by some West European economies during the same time period. Overall, Gaston and Nelson (1998) conclude that the ‘facts’ are consistent with the predictions of short-and medium-run models of labour market adjustment, for example, models in which labour markets fail to clear instantaneously, models of union-firm bargaining, models of imperfect product market competition, and political economy models of lobbying on trade legislation by self-interested parties.
