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Skill Intensity Reversal and the Rising Skill Premium: Evidence from the U.S. and Mexico

  • Kurokawa, Yoshinori

Rising skill premium in two countries can be explained simply by the Heckscher-Ohlin model assuming a “skill intensity reversal.” This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called “factor intensity reversal.” We now show clear-cut evidence: U.S. net exports to Mexico of electronics products, which were high-skill intensive in the U.S. but low-skill intensive in Mexico, increased from 1994 to 2000. U.S. net imports from Mexico of non-electronics products, which were low-skill intensive in the U.S. but high-skill intensive in Mexico, increased as well. The skill premium then increased in both countries.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14013.

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Date of creation: Jul 2006
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Handle: RePEc:pra:mprapa:14013
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  1. John R. Moroney, 1967. "The Strong-Factor-Intensity Hypothesis: A Multisectoral Test," Journal of Political Economy, University of Chicago Press, vol. 75, pages 241.
  2. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc.
  3. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  4. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
  5. Per Krusell & Lee E. Ohanian & Jose-Victor Rios-Rull & Giovanni L. Violante, 1997. "Capital-skill complementarity and inequality: a macroeconomic analysis," Staff Report 239, Federal Reserve Bank of Minneapolis.
  6. Paul Segerstrom & Elias Dinopoulos, 1999. "A Schumpeterian Model of Protection and Relative Wages," American Economic Review, American Economic Association, vol. 89(3), pages 450-472, June.
  7. Hanson, G.H. & Harrison, A., 1995. "Trade, Technology and Wage Inequality," Papers 95-20, Columbia - Graduate School of Business.
  8. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Papers 95-14, California Davis - Institute of Governmental Affairs.
  9. Berman, Eli & Bound, John & Griliches, Zvi, 1994. "Changes in the Demand for Skilled Labor within U.S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, MIT Press, vol. 109(2), pages 367-97, May.
  10. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  11. Robertson, Raymond, 2004. "Relative prices and wage inequality: evidence from Mexico," Journal of International Economics, Elsevier, vol. 64(2), pages 387-409, December.
  12. Kurokawa, Yoshinori, 2006. "Trade and Variety-Skill Complementarity: A Simple Trade-Based Resolution of Wage Inequality Anomaly," MPRA Paper 14011, University Library of Munich, Germany.
  13. Paul Krugman, 1995. "Growing World Trade: Causes and Consequences," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(1, 25th A), pages 327-377.
  14. Deborah Swenson & Robert Feenstra & Gordon H. Hanson, 2003. "Offshore Assembly From The United States: Production Characteristics Of The 9802 Program," Working Papers 9810, University of California, Davis, Department of Economics.
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