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The Skill Bias of World Trade

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Author Info
Paolo Epifani
Gino Gancia

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Abstract

This article suggests that international trade, even between identical countries, can raise the relative demand for skilled labour. It shows that a simple generalisation of Krugman's (1979) model of trade in differentiated products has implications for the skill premium, through economies of scale rather than Hecksher-Ohlin effects, that are consistent with a number of stylised facts. It provides new evidence in support of these results by showing that increases in market size lead to higher returns to education, skill premia and income inequality. Copyright © The Author(s). Journal compilation © Royal Economic Society 2008.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2008.02156.x
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Publisher Info
Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 118 (2008)
Issue (Month): 530 (07)
Pages: 927-960
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Handle: RePEc:ecj:econjl:v:118:y:2008:i:530:p:927-960

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  4. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-77, March. [Downloadable!] (restricted)
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  6. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  33. Elias Dinopoulos & Paul Segerstrom, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June. [Downloadable!] (restricted)
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  37. repec:fth:prinin:375 is not listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Paolo Epifani, 2002. "Trade Liberalization, Firm Performance and Labor Market Outcomes in the Developing World What Can We Learn From Micro-Level Data?," CESPRI Working Papers 138, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Feb 2003. [Downloadable!]
    Other versions:
  2. Bonfiglioli, Alessandra, 2005. "Equities and Inequality," Seminar Papers 737, Stockholm University, Institute for International Economic Studies. [Downloadable!]
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  3. Bulent Unel, . "Firm Heterogeneity, Trade, and Wage Inequality," Departmental Working Papers 2008-02, Department of Economics, Louisiana State University. [Downloadable!]
  4. Monte, Ferdinando, 2009. "Skill Bias, Trade, and Wage Dispersion," MPRA Paper 14719, University Library of Munich, Germany, revised 06 Oct 2009. [Downloadable!]
  5. Epifani, Paolo & Gancia, Gino A., 2009. "Trade, Markup Heterogeneity and Misallocations," CEPR Discussion Papers 7217, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  6. Thierry Verdier, 2005. "Intégration commerciale « socialement responsable » : une approche en termes d'économie politique," Revue d’économie du développement, De Boeck Université, vol. 19(4), pages 55-121. [Downloadable!]
  7. José L. Groizard, 2008. "Technology Trade," DEA Working Papers 31, Universitat de les Illes Balears, Departament d'Economía Aplicada. [Downloadable!]
  8. Mathias Thoenig & Thierry Verdier, 2003. "A Theory of Defensive Skill-Biased Innovation and Globalization," American Economic Review, American Economic Association, vol. 93(3), pages 709-728, June. [Downloadable!]
    Other versions:
  9. Wilfred J. Ethier, 2002. "Globalization, Globalisation," Tinbergen Institute Discussion Papers 02-088/2, Tinbergen Institute. [Downloadable!]
  10. Carlo Devillanova & Michele Di Maio & Pietro Vertova, 2006. "Labour Mobility, Capital-Skill Complementarity and the Redistributive Effects of Trade Integration," CESPRI Working Papers 188, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Nov 2006. [Downloadable!]
  11. Robert Anderton & Paul Hiebert, . "The Impact of Globalisation on the Euro Area Macroeconomy," Discussion Papers 09/14, University of Nottingham, GEP. [Downloadable!]
  12. Gino Gancia & Fabrizio Zilibotti, 2005. "Horizontal Innovation in the Theory of Growth and Development," Economics Working Papers 831, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  13. Paolo Epifani & Gino Gancia, 2004. "Increasing Returns, Imperfect Competition and Factor Prices," Economics Working Papers 953, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2005. [Downloadable!]
    Other versions:
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