Imports and the Demand for Skilled and Unskilled Labour: The Australian Experience

Abstract

This paper employs a unit cost function to investigate the impacts of aggregate imports on the demand for skilled and unskilled labour in Australia. Similar to Tombazos (1999b), I use a model that focuses on the displacement effects of the Stolper-Samuelson variety, as well as recognizes the domestic factor-using downstream processes of imports. Contrary to the notion imports hurt unskilled workers, the results of this study suggest that imports overall may stimulate unskilled labour demand. Earnings dispersion between skilled and unskilled labour would have been greater without the occurrence of imports.