The Skill Bias of World Trade

Epifani, Paolo; Gancia, Gino

doi:10.2139/ssrn.309623

Cited by 61 publications

(65 citation statements)

References 74 publications

(38 reference statements)

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“…Recent studies, to which the present paper is related, have turned to the link between the skill premium and North‐North trade. Epifani and Gancia (2008) and Dinopoulos, Syropoulos, and Xu (2002) develop representative firm frameworks in which scale and skill intensity are correlated at the sector or firm level. With appropriate assumptions on preferences, the increase in scale inherent to trade liberalization exerts a bias towards skill demand and raises the skill premium 5 .…”

Section: Introductionmentioning

confidence: 99%

“…4 Such as the Stolper Samuelson effect -see, for example, Krugman (2000) on their relevance, or outsourcing modelsà la Feenstra and Hanson (2004). 5 Unel (2010) introduces heterogeneous firms in a framework similar to that of Epifani and Gancia (2008), but he concentrates on the reallocation of market shares between sectors as a driver of the skill premium. 6 See, for example, Clerides, Lach, and Tybout (1998), Bernard and Jensen (1999), Delgado, Farinas, and Ruano (2002).…”

Section: Introductionmentioning

confidence: 99%

“…5 5 Unel (2010) introduces heterogeneous firms in a framework similar to that of Epifani and Gancia (2008), but he concentrates on the reallocation of market shares between sectors as a driver of the skill premium. …”

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confidence: 99%

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Trade between symmetric countries, heterogeneous firms, and the skill premium

Vannoorenberghe

2011

Canadian J of Economics

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This paper examines the effects of trade liberalization between symmetric countries on the skill premium. I introduce skilled and unskilled labour in a model of trade with heterogeneous firmsà la Melitz (2003) and assume a production technology such that more productive firms are more skill intensive. I show that the effects of trade liberalization on wage inequality crucially depend on the type of trade costs considered and on their initial size. While fixed costs of trade have a potentially non-monotonic effect on the skill premium, a drop in variable trade costs unambiguously and substantially raises wage inequality. JEL classification: F12, F16Commerce entre pays symétriques, firmes hétérogènes, et primeà l'habileté. Ce mémoire examine les effets de la libéralisation du commerce entre pays symétriques sur la primeà l'habileté. On introduit du travail qualifié et non qualifié dans un modèle de commerce avec des firmes hétérogènesà la Melitz (2003), et on postule l'existence d'une technologie de production telle que les firmes plus productives ont une intensité plus grande d'utilisation des habilités. On montre que les effets de la libéralisation du commerce sur l'inégalité des salaires dépendent de manière cruciale du type de coûts du commerce pris en compte et de leur taille initiale. Alors que les coûts fixes du commerce ont un effet potentiellement non-monotone sur la prime aux habiletés, une chute dans les coûts variables du commerce augmente substantiellement et sans ambiguïté l'inégalité des salaires.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Trade between symmetric countries, heterogeneous firms, and the skill premium

Vannoorenberghe

2011

Canadian J of Economics

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“…A useful extension of our work will also be to bring skill differences in technology suggested by Epifani and Gancia (2008) and explore the implications for skill premium in the context of endogenous growth. It is of course true that several factors besides cognitive skill are important determinants of growth, openness and education.…”

Section: Discussionmentioning

confidence: 99%

Cognitive Skills, Openness and Growth*

Basu

Bhattarai

2011

Economic Record

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A significant positive relationship exists between the ratios of trade and educational spending to gross domestic product, implying that countries which are more open on the trade front also spend more on education. An open economy endogenous growth model with human capital is developed to understand this stylised fact. The model predicts that countries with greater cognitive skills spend more on education, and grow faster. These countries open up on the trade front to finance importation of raw materials for investment goods production, which becomes scarce due to the diversion of resources to education. The model highlights the importance of the productivity of human capital or cognitive skill as an important economic fundamental determining the cross-country correlation between growth, trade share and education share.* We have greatly benefitted from useful comments made by two referees and the editor. The usual disclaimer applies. Basu gratefully acknowledges a research leave from Durham University to complete this project.JEL classifications: F41, O11, O33, O41

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“…The vast majority of the literature assumes homothetic technologies where all inputs are used in the same proportions for both fixed and variable costs; see Horn (1983). For an example that focuses on the traditional skill premium, see Epifani and Gancia (2008). 4 Important contributions to this literature are Markusen and Melvin (1981), Ethier (1982a), Matsuyama (1991), and Krugman (1991).…”

Section: Introductionmentioning

confidence: 99%

Managerial versus Production Wages: Offshoring, Country Size, and Endowments

Benz

Köhler

2014

Canadian J of Economics

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We explore the role of trade in differentiated final goods as well as offshoring of tasks for inequality both within and between countries, emphasizing the distinction between managerial and production labour. We extend Grossman and Rossi‐Hansberg (2012), where task trade is driven by external economies of scale, by considering asymmetric endowments. Identifying possible equilibrium patterns of task trade, we find little scope for two‐way trade if endowments are asymmetric. Our numerical simulations identify non‐monotonicities between the level of offshoring and measures of within‐country as well as between‐country inequality.

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The Skill Bias of World Trade

Cited by 61 publications

References 74 publications

Trade between symmetric countries, heterogeneous firms, and the skill premium

Trade between symmetric countries, heterogeneous firms, and the skill premium

Cognitive Skills, Openness and Growth*

Managerial versus Production Wages: Offshoring, Country Size, and Endowments

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