Skill-Premiums in the Portuguese Tradable Services Sector: An Overview of the Existing Literature

Over the last few decades, countless researchers, based on the skill-biased technological change (SBTC) and international trade (IT) approaches, have sought explanations for the uninterrupted increase in salary gaps between workers, depending on their qualifications. These studies have focused on the economies of a country, between different countries, and manufacturing sectors. In terms of tradable service sectors, studies are very scarce. Our work aims to fill this gap in the literature and focuses on nine Portuguese sectors of tradable services from 1999 to 2022. Using panel data fixed effects econometric methodologies and dynamic generalized method of moments (GMM) panel model, the main conclusions were that the SBTC approach is predominant for these sectors and that foreign direct investment (FDI) and labor productivity (LP) reward the most qualified workers in salary terms. We also found that the wage inequalities have been widening over the years despite this slow expansion. As seen in recent studies, the international trade approach does not explain the formation of the wage gap. This underlines the urgent need for workers to acquire additional skills to obtain better wages as they will be more productive, allowing them to obtain so-called skill-wage premiums.