Twenty years after the
beginning of our modern Globalization, we are able to measure its outcomes.
Indeed, the integration of economics and societies all over the world,
involving technological, economic, political, and cultural exchanges, has had
innumerable consequences on our world[1]. Among
these consequences, we can hear lots of “stories” that are not necessarily
rational or proved: they are called myths. One of them is that Globalization
has led to the increase of the wage gap on a world scale and the arrival of
low-wages countries is mainly responsible for the spread of this belief. Thus,
our purpose is to discover whether this myth is founded or can be invalidated.
The
wage gap is defined as “the difference in rates of pay between two different
groups of people”[2]
and it does not include gains from financial assets, which is known as the
income gap. Thus, whether we can acknowledge that Globalization has lead to
a wider inequality in terms of income, things are different for wages. Due
to the increasing demand for top corporate managers, companies are becoming
more valuable, which has boosted executives’ income from salaries, stock
options and capital gains. But, as far as wages are concerned, the evolution
has not been that fast and that extraordinary, since only the real economy
(that pays wages) is called into play[3].
On
the one hand, in developed countries, while the wages of less-qualified workers
are overstrained by low-wages countries, the wages of qualified workers increase.
For instance, according to Swagel and Slaughter, “the United States wages of less-skilled workers have
fallen steeply since the late 1970s relative to those of the more skilled”[4]. The national wages distribution is more and more
unequal and leads to a feeling of injustice. On the other hand, the average wage
increases as well in developing countries thanks to Globalization. This way, the
gap between developed countries and developing countries is slowing to a
trickle. Thus, the wage repartition is becoming “fairer” at an international
level, while it is more unequal at a national scale[5].
In a nutshell, this myth has to be invalidated. Then,
we can easily understand the reason, this myth is still believed. It is a
common mistake to confuse the notion of wage gap and income gap. Moreover, the
feeling of injustice growing in developed countries appears to be founded and
has overtaken the vision on a world scale, which is still way more relevant in
our globalized world.
[1]
http://hotbabefatchicks.hubpages.com/hub/Definition-of-Globalization
[2] http://lexicon.ft.com/Term?term=wage-gap
[3] “The Income Gap : Is
globalization to blame? Only in part”, By James Pethokoukis, Posted 1/14/07, US
News
[4] « Does Globalization
Lower Wages and Export Jobs?”, Matthew J. Slaughter and Phillip Swagel, E C O N
O M I C I S S U E S, ©1997 International Monetary Fund
[5] Les
effets de la mondialisation sur les salaires et l’emploi : le salaire minimum
constitue-t-il une protection ? Intervention prononcée par Tobias Seidel,
Chercheur à l'Institute for Economic Research de Münich, au colloque du 17 mars
2008
Hi Team,
ReplyDeleteafter reading your blog I am trying to understand what wage or income gap you are exactly measuring. As far as I understood it, you are comparing skilled workers and workers with a lower educational level.
I think it would be easier to follow your argument if you consider the following two points:
-Time period of measurement
-Sample under consideration
Time Problem:
If you clearly specify the time frame for your analysis then it will be easier to follow a trend. Hence I recommend: Clearly specify which years are under consideration. That way you can compare for example the wages before an emerging economy started participating in the global economy and the current situation.
Sample Problem:
For the sample I recommend to choose a sample which is clearly specify able and comaprable across nations. If I were to choose it I would take the construction industry for houses. Eventually you can find comparable international data online. Construction is done in pretty much every country which is why it may suit best.
Greetings,
Patrick
ID: 40041596
Hey triple A.
ReplyDeleteI understood the distinction you made between wages and income gap. This distinction permits you to semantically invalidate this myth but I agree with you when you said that it is more relevant to focus on incomes than on wages. Then at some point, you made the demonstration that the myth is partly validated. Income back is becoming wider and wider in both developed and developing country, as globalization triggers lot’s of unemployment for unqualified workers in western countries, and permit few people to become really rich in developing countries.
That’s why I would like to bring two elements to help invalidate this myth :
- First, if we are studying the income difference at an international scale, I’m really not sure that we are going to state that there has been an increase of the income inequalities. Nevertheless, there has been a redistribution of wealth among countries. To be clear, It is highly probable that the international inequalities among countries (incomes are higher in country A than in country B) has become international inequalities among individuals in a globalized context (the incomes are really different from an individual to another in country A as well as in country B). That is why, at some point, we can invalidate the myth of an increase of the income gap as long as we are studying the phenomenon at international level.
- Secondly, the second piece that has to be put into debate is the time. We can perfectly state that this raise of inequality of income is linked with the early process of globalization and that a following step of diminution of inequality is coming, linked to the emergence of developing countries middle class (more likely to obtain democracy, equality, and security than the other according to Alexis de Tocqueville). Concerning the effect of globalization on incomes, I recommend the work of Kuznets which perfectly describe the process of globalization and the economic growth it triggers on inequality of incomes.
Best regards
FX
ID 40040587
Hello Triple A,
ReplyDeleteYou have explained your ideas very clearly. I agree with your standpoint: the wage repartition is becoming “fairer” at an international level, while it is more unequal at a national scale. This conclusion is based on the fact that local factory is relocated to other place where the production cost (i.e labor cost) is cheaper. That’s why the local labor suffers and the other gains. Actually, to be more specific, globalization is making wage level more unequal at a national scale "in the developed country". I would like to present another theory that further supports your argument.
Eli Heckscher and Bertil Ohlin developed the Heckscher–Ohlin model (H-O model). The model suggests that countries will export products that use their abundant and cheap factor of production and import products that use the countries' scarce (thus relatively more expensive) factor. The developed countries always have a higher capital to worker ratio in relation to developing countries. Therefore, the developed country is capital abundant relative to the developing country, and the developing country is labor abundant relative to developed country.
This suggests why the labor abundant country will attract more factories to relocate there, and hence boost up the wage and minimize the wage gap internationally.
After reading your blog about the wage gap, I feel confused about the statements about the comparison between developed and developing countries. First of all, the essay didn't state the outcomes after comparison clearly. Secondly, lack of appropriate samples make your myth vulnerable and indistinct. Last but not least, the comparison does not locate on the same level. From my point of view, the wage gap should be proved right or not by comparing equally skilled workers in different countries, not by comparing skilled workers and workers with a lower educational level in different countries. I hope my comment can help you.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteHello, team Triple A,
ReplyDeleteI really appreciate your effort put in this blog. I would say that I like its style: the global indicator is well-defined and specific; the structure is well-organized with clear title and subheadings; the APA format of books and journals is clear. All these really make me easier to follow and understand what you said.
There are two parts in this blog that I am interested most. Firstly, it is about the table of the top 10 most visited cities in the World. As a hongkonger, I am surprised that a small place like Hong Kong can be one of the top ten in the world. As you mentioned in the blog, I also wonder ‘what is the magnet with those cities?’. I suggest that you can answer the questions by choosing one or two top ten city(ies) as example(s) to talk about.
Take Hong Kong as an example. If visitors are here for business, the magnet of Hong Kong includes well-developed financial system (which is one of the top three financial centers in the world according to the research of CityofLondon in 2010), infrastructure (which is further developing according to the ‘Ten Major Infrastructure Projects’) and special relationship with China. If visitors are here for travel, the name of ‘food paradise’ and ‘shopping center’ should be attractive. If visitors are here as an exchange student, most likely, one of the magnet includes the convenience of travelling to other Asian countries, like Singapore, Malaysia, Mainland China and so on.
Secondly, it is about the link between the globalization and the number of inbound tourist arrivals per year and per city. You mentioned that globalization help improve tourism in many different aspects and you took economic, political and technological aspects as examples. I do want to add one more – educational aspect. Because of globalization, many people are aware of the importance of having knowledge and skills regarding tourism. Hence, there are many tourism management courses offered or many tourism school built around the world, like school of hotels and tourism management in the Polytechnic University of Hong Kong, and Institute for Tourism Studies in Macau. The tourism experts would be then beneficial to tourism industry in return.
That’s all I want to share. Thank you for reading.
References:
http://zh.wikipedia.org/wiki/%E9%A6%99%E6%B8%AF%E5%8D%81%E5%A4%A7%E5%BB%BA%E8%A8%AD%E8%A8%88%E5%8A%83
http://tw.myblog.yahoo.com/or_candy/article?mid=1095&l=d&fid=23