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Content: On balance, it is therefore not clear whether capital flows to and from developing countries have played a large role in promoting wage convergence, though capital flows taking the form of FDI almost certainly have. Variousstudieshave shown that skill-biased technological change is a major driver in reducing the demand for unskilled workers. At the same time, the transfer of all types of technology through FDI, international trade (imports of machines and learning from competitors and sophisticated customers), and migration (via contacts with diasporas and returning migrants) from advanced to developing countries provides an enormously important opportunity for raising productivity and thus wages in the latter. Moreover, increased competition from low-wage countries tends to spur labor-saving technology in advanced countries. However, despite the deepening of these channels, remaining barriers to trade and investment, inefficiencies in transport and communications, and structural limitations to the absorption of technology in developing countries, such as insufficient levels of education and business climates that discourage ventures that could adopt technologies, continue to impede the spread of technology. Moreover, in many poor countries, even relatively old technologies are only available in selected locales and to elites, or used only by a few firms. Thus much of the technology adoption that contributes to wage convergence is actually about bringing backward regions, inefficient firms, and disadvantaged groups up to the level of the more advanced in the same country. Globalization of the Labor Market and Income Distribution
These forces of globalization have been associated with both rising living standards and a deterioration in income distribution in advanced countries: Low-skilled wages have remained flat or even declined, while high-skilled wages have increased sharply. Labor income fell as a share of GDP by 3.5 percentage points from 1993 to 2009.