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Skill Intensity Reversal and the Rising Skill Premium: Evidence from the U.S. and Mexico

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  • Kurokawa, Yoshinori

Abstract

Rising skill premium in two countries can be explained simply by the Heckscher-Ohlin model assuming a “skill intensity reversal.” This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called “factor intensity reversal.” We now show clear-cut evidence: U.S. net exports to Mexico of electronics products, which were high-skill intensive in the U.S. but low-skill intensive in Mexico, increased from 1994 to 2000. U.S. net imports from Mexico of non-electronics products, which were low-skill intensive in the U.S. but high-skill intensive in Mexico, increased as well. The skill premium then increased in both countries.

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File URL: http://mpra.ub.uni-muenchen.de/29876/
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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14013.

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Date of creation: Jul 2006
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Handle: RePEc:pra:mprapa:14013

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Related research

Keywords: Heckscher-Ohlin model; Skill intensity reversal; Rising skill premium; U.S.; Mexico;

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References

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  1. Dinopoulos, Elias & Segerstrom, Paul, 1996. "A Schumpeterian Model of Protection and Relative Wages," Working Paper Series 471, Research Institute of Industrial Economics.
  2. Daron Acemoglu, 2003. "Patterns of Skill Premia," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 199-230.
  3. Gordon H. Hanson & Ann Harrison, 1995. "Trade, Technology, and Wage Inequality," NBER Working Papers 5110, National Bureau of Economic Research, Inc.
  4. Robert C. Feenstra & Gordon H. Hanson & Deborah L. Swenson, . "Offshore Assembly From The United States: Production Characteristics Of The 9802 Program," Department of Economics 98-10, California Davis - Department of Economics.
  5. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  6. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Department of Economics 95-14, California Davis - Department of Economics.
  7. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  8. Robertson, Raymond, 2004. "Relative prices and wage inequality: evidence from Mexico," Journal of International Economics, Elsevier, vol. 64(2), pages 387-409, December.
  9. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  10. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  11. Kurokawa, Yoshinori, 2006. "Trade and Variety-Skill Complementarity: A Simple Trade-Based Resolution of Wage Inequality Anomaly," MPRA Paper 14011, University Library of Munich, Germany.
  12. John R. Moroney, 1967. "The Strong-Factor-Intensity Hypothesis: A Multisectoral Test," Journal of Political Economy, University of Chicago Press, vol. 75, pages 241.
  13. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  14. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
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Cited by:
  1. Vincenzo Caponi, 2011. "Intergenerational Transmission Of Abilities And Self‐Selection Of Mexican Immigrants," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(2), pages 523-547, 05.

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