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

92 Pages Posted: 7 Jun 2016 Last revised: 23 Jun 2023

See all articles by Wolfgang Keller

Wolfgang Keller

University of Colorado; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Hale Utar

Grinnell College

Multiple version iconThere are 3 versions of this paper

Date Written: June 2016

Abstract

This paper examines the role of international trade for job polarization– the decline in opportunities for mid-wage workers while those for high- and low-wage workers increase. With employer-employee matched data on virtually all workers and firms in Denmark between 1999 and 2009, we show that import competition has caused worker-level adjustments that lead to job polarization. When mid-wage workers adjust to the shock, highly educated and skilled workers end up in high-wage jobs whereas less educated workers end up in low-wage positions. We show that the specific tasks performed by a worker are central in determining trade’s impact, and workers performing manual tasks are the ones most affected regardless of how routine or non-routine these tasks are. Trade lets foreign workers compete against domestic workers, in contrast to technical progress which pits man versus machine country by country. Quantitatively, we find that job polarization through trade-induced worker adjustments is at least as strong as through technical change and offshoring.

Suggested Citation

Keller, Wolfgang and Utar, Hale, International Trade and Job Polarization: Evidence at the Worker-Level (June 2016). NBER Working Paper No. w22315, Available at SSRN: https://ssrn.com/abstract=2790711

Wolfgang Keller (Contact Author)

University of Colorado ( email )

Department of Economics
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National Bureau of Economic Research (NBER)

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Centre for Economic Policy Research (CEPR)

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Hale Utar

Grinnell College ( email )

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+1 641 2699225 (Phone)

HOME PAGE: http://www.grinnell.edu/user/utarhale

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