Trade‐Induced Skill Polarization

19 Pages Posted: 14 May 2020

See all articles by Grace Weishi Gu

Grace Weishi Gu

University of California, Santa Cruz - Department of Economics

Samreen Malik

New York University (NYU) - New York University Abu Dhabi

Dario Pozzoli

Copenhagen Business School

Vera Rocha

Copenhagen Business School

Date Written: January 2020

Abstract

We study how wage gaps across skills and the skill distribution in an economy respond to trade integration. Using administrative data of Denmark (1995–2011), we find that trade has a negative effect on the wage gap between secondary and primary education and a positive effect on the wage gap between tertiary and secondary education. We also show that trade affects skill distribution and induces skill polarization: trade has a positive effect on both the mean and standard deviation of skills. Wage‐gap changes induced by trade shocks explain about 21%–30% of the effect of trade on skills.

Suggested Citation

Steadmon, Weishi and Malik, Samreen and Pozzoli, Dario and Rocha, Vera, Trade‐Induced Skill Polarization (January 2020). Economic Inquiry, Vol. 58, Issue 1, pp. 241-259, 2020, Available at SSRN: https://ssrn.com/abstract=3596432 or http://dx.doi.org/10.1111/ecin.12834

Weishi Steadmon (Contact Author)

University of California, Santa Cruz - Department of Economics ( email )

Santa Cruz, CA 95064
United States
+1 (831) 459-4791 (Phone)

HOME PAGE: http://https://sites.google.com/site/graceweishigu/home

Samreen Malik

New York University (NYU) - New York University Abu Dhabi ( email )

PO Box 129188
Abu Dhabi
United Arab Emirates

HOME PAGE: http://samreenmalik.net

Dario Pozzoli

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
Denmark

Vera Rocha

Copenhagen Business School ( email )

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