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Two Tales on the Returns to Education: The Impact of Trade on Wages

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Author Info
Tebaldi, Edinaldo
Kim, Jongsung

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Abstract

This paper uses microdata from the Current Population Survey combined with data from the U.S. International Trade Commission and Bureau of Economic Analysis to evaluate the impacts of international trade (imports penetration and exports intensiveness) on wages with a special focus on the returns to education. Consistent with the literature, our empirical analysis provides evidence that the wage rates of similarly skilled workers differ across net-exporting, net-importing and nontradable industries. Our results add to the literature by showing that the wage gap usually found across importing and exporting industries vanishes for highly-skilled workers (workers with college degree and beyond) when we control for the cross-effect between international trade and education, but the wage gap due to international trade still persists for low-skilled workers. This finding supports the view that education serves as an equalizer and counterbalances the adverse impact from imports-penetration on wages of highly-skilled workers

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9698.

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Date of creation: 07 Jul 2008
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Handle: RePEc:pra:mprapa:9698

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Related research
Keywords: Trade; Returns to Education; Wage Differential;

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Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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References listed on IDEAS
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  1. Pablo Acosta & Leonardo Gasparini, 2007. "Capital Accumulation, Trade Liberalization, and Rising Wage Inequality: The Case of Argentina," Economic Development and Cultural Change, University of Chicago Press, vol. 55, pages 793-812. [Downloadable!]
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  2. Donald R. Davis & James Harrigan, 2007. "Good jobs, bad jobs, and trade liberalization," Discussion Papers 0607-07, Columbia University, Department of Economics. [Downloadable!]
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  3. Leamer, Edward E. & Levinsohn, James, 1995. "International trade theory: The evidence," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 26, pages 1339-1394 Elsevier. [Downloadable!] (restricted)
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  4. Busse, Matthias & Spielmann, Christian, 2005. "Gender Inequality and Trade," Discussion Paper Series 26218, Hamburg Institute of International Economics. [Downloadable!]
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  5. Marc-Andreas Muendler, 2007. "Trade and Workforce Changeover in Brazil," University of California at San Diego, Economics Working Paper Series 2007-01, Department of Economics, UC San Diego. [Downloadable!]
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  6. Andrew B. Bernard & J. Bradford Jensen, 2004. "Why Some Firms Export," The Review of Economics and Statistics, MIT Press, vol. 86(2), pages 561-569, 04. [Downloadable!] (restricted)
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  7. Taylor, Karl, 2002. "The Impact of Technology and Trade upon the Returns to Education and Occupation," Applied Economics, Taylor and Francis Journals, vol. 34(11), pages 1371-77, July. [Downloadable!] (restricted)
  8. Devashish Mitra & Vitor Trindade, 2005. "Inequality and trade," Canadian Journal of Economics, Canadian Economics Association, vol. 38(4), pages 1253-1271, November. [Downloadable!] (restricted)
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  9. Halvorsen, Robert & Palmquist, Raymond, 1980. "The Interpretation of Dummy Variables in Semilogarithmic Equations," American Economic Review, American Economic Association, vol. 70(3), pages 474-75, June. [Downloadable!] (restricted)
  10. Bruce Elmslie & Edinaldo Tebaldi, 2007. "Sexual Orientation and Labor Market Discrimination," Journal of Labor Research, Springer, vol. 28(3), pages 436-453, July. [Downloadable!] (restricted)
  11. Andrew B. Bernard & J. Bradford Jensen, 2000. "Understanding Increasing and Decreasing Wage Inequality," NBER Chapters, in: The Impact of International Trade on Wages, pages 227-268 National Bureau of Economic Research, Inc. [Downloadable!]
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  12. Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
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