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International Trade and Job Polarization: Evidence at the Worker-Level

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  • Keller, Wolfgang
  • Utar, Hale

Abstract

This paper examines the role of international trade for job polarization, the phenomenon in which employment for high- and low-wage occupations increases but mid-wage occupations decline. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we use instrumental-variables techniques and a quasi-natural experiment to show that import competition is a major cause of job polarization. Import competition with China accounts for about 17% of the aggregate decline in mid-wage employment. Many mid-skill workers are pushed into low-wage service jobs while others move into high-wage jobs. The direction of movement, up or down, turns on the skill focus of workers' education. Workers with vocational training for a service occupation can avoid moving into low-wage service jobs, and among them workers with information-technology education are far more likely to move into high-wage jobs than other workers.

Suggested Citation

  • Keller, Wolfgang & Utar, Hale, 2016. "International Trade and Job Polarization: Evidence at the Worker-Level," CEPR Discussion Papers 11311, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:11311
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    More about this item

    Keywords

    import competition; inequality; occupational change; vocational education;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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