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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
Date of revision:
Handle: RePEc:pra:mprapa:14013
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  1. Gordon H. Hanson & Ann Harrison, 1995. "Trade, Technology, and Wage Inequality," NBER Working Papers 5110, National Bureau of Economic Research, Inc.
  2. Gordon H. Hanson & Ann Harrison, 1999. "Trade liberalization and wage inequality in Mexico," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 52(2), pages 271-288, January.
  3. 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.
  4. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc.
  5. E. Berman & J. Bound & S. Machin, 1997. "Implications of skill-biased technological change: international evidence," LSE Research Online Documents on Economics 20314, London School of Economics and Political Science, LSE Library.
  6. Raymond Robertson, 2006. "Globalization and Mexican labor markets," Proceedings, Federal Reserve Bank of Dallas, pages 61-80.
  7. 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.
  8. 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.
  9. Per Krusell & Lee E. Ohanian & JosÈ-Victor RÌos-Rull & Giovanni L. Violante, 2000. "Capital-Skill Complementarity and Inequality: A Macroeconomic Analysis," Econometrica, Econometric Society, vol. 68(5), pages 1029-1054, September.
  10. 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.
  11. Robert C. Feenstra & Gordon H. Hanson & Deborah L. Swenson, . "Offshore Assembly From The United States: Production Characteristics Of The 9802 Program," Department of Economics 98-10, California Davis - Department of Economics.
  12. Robert C. Feenstra & Gordon H. Hanson, 1995. "Foreign Investment, Outsourcing and Relative Wages," NBER Working Papers 5121, National Bureau of Economic Research, Inc.
  13. Selin Sayek & Fuat Sener, 2006. "Outsourcing and Wage Inequality in a Dynamic Product Cycle Model," Review of Development Economics, Wiley Blackwell, vol. 10(1), pages 1-19, 02.
  14. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  15. John R. Moroney, 1967. "The Strong-Factor-Intensity Hypothesis: A Multisectoral Test," Journal of Political Economy, University of Chicago Press, vol. 75, pages 241.
  16. 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.
  17. 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.
  18. Robertson, Raymond, 2004. "Relative prices and wage inequality: evidence from Mexico," Journal of International Economics, Elsevier, vol. 64(2), pages 387-409, December.
  19. Esquivel, Gerardo & Rodriguez-Lopez, Jose Antonio, 2003. "Technology, trade, and wage inequality in Mexico before and after NAFTA," Journal of Development Economics, Elsevier, vol. 72(2), pages 543-565, December.
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