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Two Tales on the Returns to Education: The Impact of Trade on Wages

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  • Tebaldi, Edinaldo
  • Kim, Jongsung

Abstract

This paper uses microdata from the Current Population Survey combined with data from the U.S. International Trade Commission and Bureau of Economic Analysis to evaluate the impacts of international trade (imports penetration and exports intensiveness) on wages with a special focus on the returns to education. Consistent with the literature, our empirical analysis provides evidence that the wage rates of similarly skilled workers differ across net-exporting, net-importing and nontradable industries. Our results add to the literature by showing that the wage gap usually found across importing and exporting industries vanishes for highly-skilled workers (workers with college degree and beyond) when we control for the cross-effect between international trade and education, but the wage gap due to international trade still persists for low-skilled workers. This finding supports the view that education serves as an equalizer and counterbalances the adverse impact from imports-penetration on wages of highly-skilled workers

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9698.

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Date of creation: 07 Jul 2008
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Handle: RePEc:pra:mprapa:9698

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Keywords: Trade; Returns to Education; Wage Differential;

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References

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  1. J Bradford Jensen & Andrew B Bernard, 2001. "Why Some Firms Export," Working Papers 01-05, Center for Economic Studies, U.S. Census Bureau.
  2. Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November.
  3. Davis, Donald R. & Harrigan, James, 2011. "Good jobs, bad jobs, and trade liberalization," Journal of International Economics, Elsevier, vol. 84(1), pages 26-36, May.
  4. Devashish Mitra & Vitor Trindade, 2003. "Inequality and Trade," NBER Working Papers 10087, National Bureau of Economic Research, Inc.
  5. Busse, Matthias & Spielmann, Christian, 2004. "Gender Inequality and Trade," HWWA Discussion Papers 308, Hamburg Institute of International Economics (HWWA).
  6. Edward E. Leamer & James Levinsohn, 1994. "International Trade Theory: The Evidence," NBER Working Papers 4940, National Bureau of Economic Research, Inc.
  7. Karl Taylor, 2002. "The impact of technology and trade upon the returns to education and occupation," Applied Economics, Taylor & Francis Journals, vol. 34(11), pages 1371-1377.
  8. Marc-Andreas Muendler, 2008. "Trade and Workforce Changeover in Brazil," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 269-308 National Bureau of Economic Research, Inc.
  9. Andrew B. Bernard & J. Bradford Jensen, 1998. "Understanding Increasing and Decreasing Wage Inequality," NBER Working Papers 6571, National Bureau of Economic Research, Inc.
  10. Leonardo Gasparini & Pablo Acosta, 2004. "Capital Accumulation, Trade Liberalization and Rising Wage Inequality: The Case of Argentina," CEDLAS, Working Papers 0005, CEDLAS, Universidad Nacional de La Plata.
  11. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June.
  12. Bruce Elmslie & Edinaldo Tebaldi, 2007. "Sexual Orientation and Labor Market Discrimination," Journal of Labor Research, Springer, vol. 28(3), pages 436-453, July.
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Cited by:
  1. Jongsung Kim & Edinaldo Tebaldi, 2011. "Does international trade impact wage discrimination?," Economics Bulletin, AccessEcon, vol. 31(3), pages 2709-2724.

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