Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico

35 Pages Posted: 20 Nov 2008 Last revised: 5 May 2010

See all articles by Manoj Atolia

Manoj Atolia

Florida State University - Department of Economics

Yoshinori Kurokawa

University of Tsukuba; State University of New York at Buffalo - Department of Economics

Date Written: August 29, 2009

Abstract

It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantiÂ…ed how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static general equilibrium model and then calibrates it to the Mexican input-output matrix for 1987. In the calibrated model, our numerical experiments show that the increase in U.S.-Mexican variety trade can account for approximately 12 percent of the actual increase in skill premium in Mexico from 1987 to 2000.

Keywords: Variety Trade, Skill Premium, Variety-Skill Complementarity, Calibrated General Equilibrium Model, Mexico

JEL Classification: F12, F16

Suggested Citation

Atolia, Manoj and Kurokawa, Yoshinori, Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico (August 29, 2009). Available at SSRN: https://ssrn.com/abstract=1302937 or http://dx.doi.org/10.2139/ssrn.1302937

Manoj Atolia (Contact Author)

Florida State University - Department of Economics ( email )

Tallahassee, FL 30306-2180
United States
+1.850.644.7088 (Phone)
+1.850.644.4535 (Fax)

HOME PAGE: http://mailer.fsu.edu/~matolia/

Yoshinori Kurokawa

University of Tsukuba ( email )

Tsukuba University , Ibaraki Ken
Tsukuba, Ibaraki 305-8573, Ibaraki 3050006
Japan
81-29-853-7426 (Phone)
81-29-853-7426 (Fax)

HOME PAGE: http://www.dpipe.tsukuba.ac.jp/~kurokawa/

State University of New York at Buffalo - Department of Economics ( email )

415 Fronczak Hall
Buffalo, NY 14260-1520
United States
1-716-645-2121x447 (Phone)
1-716-645-2127 (Fax)

HOME PAGE: http://www.acsu.buffalo.edu/~ykurok/

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