Trade and Wage Inequality: Local versus Global Comparative Advantages
AbstractThis paper shows that disentangling the local and global dimensions of trade can be crucial to get a better understanding of the trade impact on wage inequality. In particular, it allows us to reconcile the empirical evidence with the Heckscher-Ohlin-Samuelson predictions. Our focus here is on Italy, which represents, in our opinion, an appropriate case study. As for local trade -within its own cone of diversification - Italy is specialized in the production of unskill-intensive goods, while for global trade -with respect to the other cone of diversification- it is mainly specialized in the production of skill-intensive goods. On the evidence of these specialization patterns, we point out that the local trade entails a strong impact on wage inequality. In particular, in line with the Heckscher-Ohlin-Samuelson predictions, the local export performance reduces wage inequality since it favours blue-collar workers. As for global trade, it affects and increases wage inequality through the export channel, again consistently with the Heckscher-Ohlin-Samuelson predictions.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The World Economy.
Volume (Year): 33 (2010)
Issue (Month): 12 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0378-5920
Other versions of this item:
- Alessia Matano & Paolo Naticchioni, 2008. "Trade and wage inequality: Local versus Global comparative advantages," Working Papers - Dipartimento di Economia 6-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2008.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
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- Paolo Naticchioni & Andrea Ricci & Emiliano Rustichelli, 2008. "Wage Inequality, Employment Structure and Skill-biased Change in Italy," LABOUR, CEIS, vol. 22(s1), pages 27-51, 06.
- Rafal Kierzenkowski & Isabell Koske, 2012. "Less Income Inequality and More Growth – Are they Compatible? Part 8. The Drivers of Labour Income Inequality – A Literature Review," OECD Economics Department Working Papers 931, OECD Publishing.
- Alessia Matano & Paolo Naticchioni, 2009. "Wage distribution and the spatial sorting of workers and firms," Working Papers - Dipartimento di Economia 8-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2009.
- Accetturo, Antonio & Bugamelli, Matteo & Lamorgese, Andrea R., 2013.
"Skill upgrading and exports,"
Elsevier, vol. 121(3), pages 417-420.
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