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The Contribution of Trade to Wage Inequality: The Role of Skill, Gender, and Nationality

  • Michael W. Klein
  • Christoph Moser
  • Dieter M. Urban

International trade has been cited as a source of widening wage inequality in industrial nations. Consistent with this claim, we find a significant export wage premium for high-skilled workers in German manufacturing and an export wage discount for lower skilled workers, using matched employer-employee data. Estimates suggest that the export wage premium to high-skilled workers represents up to one third of their overall skill premium. But, while an increase in exports increases wage inequality along the dimension of skill, it diminishes the wage inequality associated with both gender and nationality. In this way, trade contributes to narrowing wage gaps and mitigating wage inequality in German manufacturing.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15985.

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Date of creation: May 2010
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Publication status: published as “Exporting, Skills, and Wage Inequality,” (with Christoph Moser and Dieter Urban), Labour Economics, forthcoming.
Handle: RePEc:nbr:nberwo:15985
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