Trade between symmetric countries, heterogeneous firms, and the skill premium
AbstractThis paper examines the effects of trade liberalization between symmetric countries on the skill premium. I introduce skilled and unskilled labour in a model of trade with heterogeneous firms à la Melitz (2003) and assume a production technology such that more productive firms are more skill intensive. I show that the effects of trade liberalization on wage inequality crucially depend on the type of trade costs considered and on their initial size. While fixed costs of trade have a potentially non-monotonic effect on the skill premium, a drop in variable trade costs unambiguously and substantially raises wage inequality.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 44 (2011)
Issue (Month): 1 (February)
Contact details of provider:
Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Web page: http://economics.ca/cje/
More information through EDIRC
Find related papers by JEL classification:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- James Harrigan & Ariell Reshef, 2011. "Skill Biased Heterogeneous Firms, Trade Liberalization, and the Skill Premium," NBER Working Papers 17604, National Bureau of Economic Research, Inc.
- Ferguson, Shon, 2012. "Cross-Industry Heterogeneity in Export Participation: The Role of Scale Economies in R&D," Working Paper Series 930, Research Institute of Industrial Economics.
- Julian Emami Namini & Giovanni Facchini & Ricardo A. López, 2013.
"Export Growth and Firm Survival,"
Development Working Papers
350, Centro Studi Luca d\'Agliano, University of Milano, revised 24 Apr 2013.
- Mauro Caselli, 2010.
"Trade, skill-biased technical change and wages in Mexican manufacturing,"
Economics Series Working Papers
CSAE WPS/2010-28, University of Oxford, Department of Economics.
- Mauro Caselli, 2010. "Trade, skill-biased technical change and wages in Mexican manufacturing," CSAE Working Paper Series 2010-28, Centre for the Study of African Economies, University of Oxford.
- Catia Montagna & Antonella Nocco, 2012. "Trade Costs, International Competition and Selection: The Effects of Unionisation on Market Size," Dundee Discussion Papers in Economics 269, Economic Studies, University of Dundee.
- Hiroyuki Kasahara & Yawen Liang & Joel Rodrigue, 2013. "Does Importing Intermediates Increase the Demand for Skilled Workers? Plant-level Evidence from Indonesia," CESifo Working Paper Series 4463, CESifo Group Munich.
- Engelmann, Sabine, 2011. "Trade liberalisation, technical change and skill-specific unemployment," IAB Discussion Paper 201119, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Crozet, Matthieu & Trionfetti, Federico, 2013. "Firm-level comparative advantage," Journal of International Economics, Elsevier, vol. 91(2), pages 321-328.
- Julian Emami Namini & Ricardo A. López, 2013.
"Factor price overshooting with trade liberalization: theory and evidence,"
Scottish Journal of Political Economy,
Scottish Economic Society, vol. 60(2), pages 139-181, 05.
- Julian Emami Namini & Ricardo Lopez, 2012. "Factor Price Overshooting with Trade Liberalization: Theory and Evidence," Working Papers 52, Brandeis University, Department of Economics and International Businesss School.
- Ariel Burstein & Jonathan Vogel, 2010. "Globalization, Technology, and the Skill Premium: A Quantitative Analysis," NBER Working Papers 16459, National Bureau of Economic Research, Inc.
- Mauro Caselli, 2010.
"Trade liberalisation, skill-biased technical change and wages in developing countries: a model with heterogeneous firms,"
CSAE Working Paper Series
2010-27, Centre for the Study of African Economies, University of Oxford.
- Mauro Caselli, 2010. "Trade liberalisation, skill-biased technical change and wages in developing countries: a model with heterogeneous firms," Economics Series Working Papers CSAE WPS/2010-27, University of Oxford, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Prof. Werner Antweiler).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.