Narrow Results

During the last few decades an important feature of the on-going process of globalization is production fragmentation. Owing to the growing importance of international fragmentation of production processes the composition of international trade has indeed altered in recent years. Here we want to focus on production fragmentation which actually implies that the requirement for the intermediate goods can be met by producing it domestically or it can be imported from abroad. In this paper we want to examine the probable causes for a developing economy to switchover from a regime of no fragmentation to fragmentation. Here the impact of such a regime change has also been examined on wage inequality as well as on the incidence of skill formation within the economy. Moreover, we have examined here the impact of perfect international capital mobility on the economy in the context of regime change between fragmentation and no fragmentation.

The purpose of this article is twofold: (1) to rekindle old debates surrounding the efficacy of craft unionism (as opposed industrial unionism) in the age of globalization in order to provide insight into recent contentions by the Airline Mechanics Fraternal Association (AMFA) regarding the potential for craft strategy among mechanics in the air transport industry; and (2) to present a theoretical framework that combines the process of skill formation and technological change in a consistent and unifying manner. The theoretical framework offered here illuminates the transitory nature and meaning of skills in capitalism. Given the transitory meaning of skills and their extrinsic determination by the fast-pace of technology, to maintain reliance on the intrinsic value of skills alone—as AMFA seemingly does— should invite skepticism.Three global trends are identified that affect mechanics in air transport: the diminished role of major carriers, the change of fleet composition, and the growing use of outsourcing. These developments are discussed and their consequence for skilling and deskilling is examined. These tendencies align with the view that universal labor contingency is an aspect of contemporary globalization. In view of this fact, the article urges labor educator and union activists to carefully evaluate AMFA’s strategy.

A frontier-general equilibrium analysis with skill transformation evaluates the productivities of skilled and unskilled labour and potential of the Indian economy. We compare the wages of skilled and unskilled labour between 1994 and 2002 with their respective productivities over this period. Education is considered to be responsible for the skill formation over this period: the change in skilled labour supply is endogenous in the model. Compared to its productivity, skilled labour is underpaid in the initial period and overpaid in the second period. Unskilled labour is underpaid in both periods. A decomposition exercise shows that skilled labour gains from free trade, and stands to lose due to education and domestic competition in the second period. The annualized rate of return to education is between 7 and 10%. The economy operates below its potential in both periods, particularly in the second — due to trade limitations and the failure to capture the return to education. Service sectors are found to have potential to grow significantly.