Trade and Wage Inequality: Local Versus Global Comparative Advantages

31 Pages Posted: 18 Apr 2011

See all articles by Alessia Matano

Alessia Matano

University of Rome I

Paolo Naticchioni

University of Rome I; University of Cassino

Multiple version iconThere are 2 versions of this paper

Date Written: December 1, 2010

Abstract

This paper shows that disentangling the local and global dimensions of trade can be crucial to get a better understanding of the trade impact on wage inequality. In particular, it allows us to reconcile the empirical evidence with the Heckscher-Ohlin-Samuelson predictions. Our focus here is on Italy. As for local trade within its own cone of diversification Italy is specialised in the production of unskill-intensive goods, while for global trade with respect to the other cone of diversification it is mainly specialised in the production of skill-intensive goods. On the evidence of these specialisation patterns, we point out that the local trade has a strong impact on wage inequality. In particular, in line with the Heckscher-Ohlin-Samuelson predictions, the local export performance reduces wage inequality as it favours blue-collar workers. As for global trade, it affects and increases wage inequality through the export channel, again consistent with the Heckscher-Ohlin-Samuelson predictions.

Suggested Citation

Matano, Alessia and Naticchioni, Paolo, Trade and Wage Inequality: Local Versus Global Comparative Advantages (December 1, 2010). The World Economy, Vol. 33, No. 12, pp. 1757-1787, 2010. Available at SSRN: https://ssrn.com/abstract=1811467 or http://dx.doi.org/10.1111/j.1467-9701.2010.01293.x

Alessia Matano (Contact Author)

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

Paolo Naticchioni

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

University of Cassino ( email )

Cassino
Italy

Register to save articles to
your library

Register

Paper statistics

Downloads
2
Abstract Views
202
PlumX Metrics