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Trade Induced Skill Upgrading: Lessons from the Danish and Portuguese Experiences

Author

Listed:
  • Gu, Grace Weishi

    () (University of California, Santa Cruz)

  • Malik, Samreen

    () (New York University, Abu Dhabi)

  • Pozzoli, Dario

    () (Copenhagen Business School)

  • Rocha, Vera

    () (Copenhagen Business School)

Abstract

We study how the skill distribution for an economy responds to changes in the skill premium induced by trade integration. Using administrative data for Denmark (1993- 2012) and Portugal (1993-2011), we conduct a two-step analysis. In the first step we predict the skill premium changes which are triggered by exogenous trade shocks. In the second step we estimate the impact of such changes on the skill distribution. The main results for Denmark show that both the average and the standard deviation of skills increase as a result of trade integration. For Portugal we find instead that the impact of trade mediated by skill premium changes is negligible and not statistically significant. We provide a theoretical intuition to rationalize both sets of results.

Suggested Citation

  • Gu, Grace Weishi & Malik, Samreen & Pozzoli, Dario & Rocha, Vera, 2016. "Trade Induced Skill Upgrading: Lessons from the Danish and Portuguese Experiences," IZA Discussion Papers 10035, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10035
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    References listed on IDEAS

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    More about this item

    Keywords

    skill upgrading; trade integration; labor market frictions; skill premium;

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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