The Skill Bias of World Trade
UPF Economics and Business Working Paper 833
43 Pages Posted: 29 Nov 2005
There are 2 versions of this paper
Date Written: November 2004
Abstract
Under plausible assumptions about preferences and technology, the model in this paper suggests that the entire volume of world trade matters for wage inequality. Therefore, trade integration, even among identical countries, is likely to increase the skill premium. Further, we argue that empirical evidence of a falling relative price of skill-intensive goods can be reconciled with the fast growth of world trade and that the intersectoral mobility of capital exacerbates the effect of trade on inequality. We provide new empirical evidence in support of our results and a quantitative assessment of the skill bias of world trade.
Keywords: Skill premium, scale e.ect, intra-industry and inter-industry trade
JEL Classification: F12, F16
Suggested Citation: Suggested Citation
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