Journal of Political Economy Vol. 125 No. 5 2017
International Trade, Technology, and the Skill Premium
Abstract
What are the consequences of international trade on the skill premium? We incorporate skill-intensity differences across firms and sectors into a standard model of international trade. Reductions in trade costs reallocate factors toward a country's comparative advantage sectors, increasing the skill premium in countries with a comparative advantage in skill-intensive sectors and decreasing it elsewhere. Reductions in trade costs also reallocate factors toward more productive and skill-intensive firms within sectors and toward skill-intensive sectors in all countries, increasing the skill premium in all countries. Quantitatively, we find that trade liberalization increases the skill premium in almost all countries.
- DOI
- 10.1086/693373
- Volume
- 125
- Issue
- 5
- Pages
- 1356-1412
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref