A Noteon Terms of Trade Shocks and the Wage Gap
AbstractUsing Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a skilled-intensive non-tradable sector we show that improvements in the terms of trade benefit skilled workers. We also show that this relation holds at the industry level: the wage gap widens in skilled-intensive sectors while it shrinks in unskilled-intensive ones, the more so as terms of trade volatility decreases.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/279.
Date of creation: 01 Dec 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-03 (All new papers)
- NEP-INT-2011-01-03 (International Trade)
- NEP-LAB-2011-01-03 (Labour Economics)
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