The Skill Bias of World Trade

Research, Preprint, Report English OPEN
Epifani, Paolo ; Gancia, Gino A. (2002)
  • Publisher: Stockholm : IIES
  • Subject: scale e.ect | intra-industry and inter-industry trade | scale effect | Economics | Skill Premium, Scale Effect, Intra-Industry, Inter-Industry Trade | Skill Premium, Scale E.ect, Intra-Industry and Inter-Industry Trade | Macroeconomics and International Economics | skill premium | Nationalekonomi | Skill Premium; Scale Effect; Intra-Industry and Inter-Industry Trade
    • jel: jel:F12 | jel:F16

We argue that, with an elasticity of substitution in consumption greater than one and higher scale economies in the skill-intensive sectors, the entire volume of world trade matters for wage inequality. This implies that trade intergration, even among identical countries, is likely to increase the skill premium. This result can also explain the increase in skill premia in developing countries that have experienced drastic trade liberalizations. Further, we argue that 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. Published in connection with a visit at the IIES.
  • References (30)
    30 references, page 1 of 3

    [1] Acemoglu, Daron (2003). “Patterns of Skill-Premia,” Review of Economic Studies 70(2), 199-230.

    [2] Alesina, Alberto, Enrico Spolaore and Romain Wacziarg (2000). “Economic Integration and Political Disintegration,” American Economic Review 90, 1276-1296.

    [3] Antweiler, Werner and Daniel Trefler (2002). “Increasing Returns and All That: A View from Trade,” American Economic Review 92, 93-119.

    [4] Autor, David H., Lawrence F. Katz and Alan B. Krueger (1998). “Computing Inequality: Have Computers Changed the Labor Market?,” Quarterly Journal of Economics 113, 1169-1213.

    [5] Banerjee, Abhijit V. and Esther Duflo (2004). “Growth Theory Through the Lens of Development Economics,” forthcoming in Handbook of Economic Growth, 2004.

    [6] Basu, Susanto and John. G. Fernald (1997). “Returns to Scale in U.S. Production: Estimates and Implications,” Journal of Political Economy 105, 249-283.

    [7] Berman, Eli, John Bound and Stephen Machin (1998). “Implications of Skill-Biased Technological Change: International Evidence,” Quarterly Journal of Economics 113, 1245-1280.

    [8] Berman, Eli, John Bound and Zvi Griliches (1994). “Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing ,” Quarterly Journal of Economics 109, 367-398.

    [9] Burnside, Craig (1996). “Production Function Regressions, Returns to Scale, and Externalities,” Journal of Monetary Economics 37, 177-201.

    [10] Caselli, Francesco (1999). “Technological Revolutions,” American Economic Review 89, 78-102.

  • Metrics
    No metrics available
Share - Bookmark