Trade Imbalances, Export Structure and Wage Inequality

39 Pages Posted: 5 Nov 2013

See all articles by Rosario Crinò

Rosario Crinò

Catholic University of Milan

Paolo Epifani

Bocconi University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: October 1, 2013

Abstract

We study, both theoretically and empirically, how trade imbalances affect the structure of countries’exports and wage inequality. We show that, in a Heckscher-Ohlin model with a continuum of goods, a Southern (Northern) trade surplus leads to an increase (reduction) in the average skill intensity of exports, in the relative demand for skills and in the skill premium in both countries. We provide robust support for the mechanism underlying these predictions using a large panel of countries observed over the past 30 years. Our results suggest that the large and growing North-South trade imbalances arisen over the last three decades may have exacerbated wage inequality worldwide.

Keywords: North-South Trade Imbalances; Average Skill Intensity of Exports; Skill Premia

JEL Classification: F1

Suggested Citation

Crinò, Rosario and Epifani, Paolo, Trade Imbalances, Export Structure and Wage Inequality (October 1, 2013). Baffi Center Research Paper No. 2013-141. Available at SSRN: https://ssrn.com/abstract=2349606 or http://dx.doi.org/10.2139/ssrn.2349606

Rosario Crinò (Contact Author)

Catholic University of Milan ( email )

1 Largo A. Gemelli
Milano (Milan), MI Milano 20123
Italy

Paolo Epifani

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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