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With whom do you trade? Defensive innovation and the skill-bias

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Listed:
  • Pushan Dutt
  • Daniel Traça

Abstract

We examine whether increased trade with countries with ineffective protection of intellectual property has contributed to the skill-deepening of the 1980s. We construct an index of effective protection of intellectual property at the country level, combining data on protection of patents and rule of law. Next, we construct an industry-specific version of this index, using as weights each country's trade share in the total trade of the industry. We find a decline in this trade-weighted index, owing to a rise in trade with countries with low effective protection of intellectual property, which explains 29% of the rise in within-industry skill-intensity.

Suggested Citation

  • Pushan Dutt & Daniel Traça, 2010. "With whom do you trade? Defensive innovation and the skill-bias," Canadian Journal of Economics, Canadian Economics Association, vol. 43(4), pages 1198-1220, November.
  • Handle: RePEc:cje:issued:v:43:y:2010:i:4:p:1198-1220
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    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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