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Two Tales on the Returns to Education: The Impact of Trade on Wages

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  • Edinaldo Tebaldi
  • Jongsung Kim

Abstract

This paper uses micro data from the Current Population Survey combined with data from the US International Trade Commission and Bureau of Economic Analysis to evaluate the impacts of international trade (import penetration and export intensiveness) on wages with a special focus on the returns to education. Consistent with the literature, our empirical analysis provides evidence that the wage rates of similarly skilled workers differ across net-exporting, net-importing, and nontradable industries. Our results add to the literature by showing that the wage gap usually found across importing and exporting industries vanishes for highly skilled workers (workers with college degree and beyond) when we control for the cross-effect between international trade and education, but the wage gap due to international trade still persists for low-skilled workers. This finding supports the view that education serves as an equalizer and counterbalances the adverse impact from import penetration on wages of highly skilled workers. Copyright (C) 2010 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Development Economics.

Volume (Year): 14 (2010)
Issue (Month): 4 (November)
Pages: 768-782

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Handle: RePEc:bla:rdevec:v:14:y:2010:i:4:p:768-782

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  1. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
  2. Leamer, E. & Levingsohn, J., 1994. "International Trade Theory: The Evidence," Working Papers 368, Research Seminar in International Economics, University of Michigan.
  3. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  4. Karl Taylor, 2002. "The impact of technology and trade upon the returns to education and occupation," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1371-1377.
  5. Leonardo Gasparini & Pablo Acosta, 2004. "Capital Accumulation, Trade Liberalization and Rising Wage Inequality: The Case of Argentina," CEDLAS, Working Papers 0005, CEDLAS, Universidad Nacional de La Plata.
  6. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  7. Donald R. Davis & James Harrigan, 2007. "Good Jobs, Bad Jobs, and Trade Liberalization," NBER Working Papers 13139, National Bureau of Economic Research, Inc.
  8. Devashish Mitra & Vitor Trindade, 2005. "Inequality and trade," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1253-1271, November.
  9. Marc-Andreas Muendler, 2007. "Trade and Workforce Changeover in Brazil," NBER Working Papers 12980, National Bureau of Economic Research, Inc.
  10. Andrew B. Bernard & J. Bradford Jensen, 2000. "Understanding Increasing and Decreasing Wage Inequality," NBER Chapters, in: The Impact of International Trade on Wages, pages 227-268 National Bureau of Economic Research, Inc.
  11. Busse, Matthias & Spielmann, Christian, 2004. "Gender Inequality and Trade," HWWA Discussion Papers 308, Hamburg Institute of International Economics (HWWA).
  12. Bruce Elmslie & Edinaldo Tebaldi, 2007. "Sexual Orientation and Labor Market Discrimination," Journal of Labor Research, Springer, vol. 28(3), pages 436-453, July.
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Cited by:
  1. Jongsung Kim & Edinaldo Tebaldi, 2011. "Does international trade impact wage discrimination?," Economics Bulletin, AccessEcon, vol. 31(3), pages 2709-2724.

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