Skilled and unskilled wage differentials and economic integration, 1870–1930

Abstract

In this article we analyse the differences between the wages of skilled and unskilled workers in the period 1870–1930 for five countries with different levels of development and economic integration: the USA, France, the UK, Italy and Spain. We have constructed a ratio of skilled to unskilled wages (the skill premium) in the industrial sector for all these countries with the exception of the USA, for which data were already available. We study the impact of globalisation, technological and structural change and labour movements on the skill premium growth rate. The main conclusion we obtain is that the globalisation variables (migration and trade) explain only part of this growth. Technological and structural change also had an impact on the skill premium growth rate. The main responses of governments to globalisation were trade and migration policies. But as trade and migration were and are not the only sources of inequality growth, other policies had and have to be implemented.