ABSTRACT
Most of the economic literature on globalisation has concentrated upon the impact of trade upon relative wages and relative employment opportunities for unskilled relative to skilled workers in OECD countries.1 This has been based upon the observed worsening of the fortunes of less-skilled workers in many industrial countries and the textbook Hechscher-Ohlin-Samuelson (HOS) model of international trade. This theory, including the Stolper-Samuelson link between changing product prices and changing relative wage rates, has been widely adopted despite rather shaky empirical support. In this framework globalisation leads to a reallocation of resources in OECD countries from import competing, low-skill-intensive industries to the high-skill-intensive sectors in which these countries have a comparative advantage. Most economists conclude that the role of policy in this context is to assist this reallocation by providing training and increasing the quantity of skilled labour.
