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Trade‐Induced Skill Polarization

Author

Listed:
  • Grace W. Gu
  • Samreen Malik
  • Dario Pozzoli
  • Vera Rocha

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

  • Grace W. Gu & Samreen Malik & Dario Pozzoli & Vera Rocha, 2020. "Trade‐Induced Skill Polarization," Economic Inquiry, Western Economic Association International, vol. 58(1), pages 241-259, January.
    • Handle: RePEc:bla:ecinqu:v:58:y:2020:i:1:p:241-259
    DOI: 10.1111/ecin.12834
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    Cited by:

    1. Grace Gu & Samreen Malik & Dario Pozzoli & Vera Rocha, 2022. "Chinese import competition, offshoring and servitization," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 901-928, April.
    2. Ria Ivandic & Anne Sophie Lassen, 2023. "Gender Gaps From Labor Market Shocks," Upjohn Working Papers 23-387, W.E. Upjohn Institute for Employment Research.
    3. Ria Ivandic & Anne Sophie Lassen, 2023. "Gender gaps from labor market shocks," CEP Discussion Papers dp1944, Centre for Economic Performance, LSE.
    4. Ivandic, Ria & Lassen, Anne Sophie, 2023. "Gender gaps from labor market shocks," LSE Research Online Documents on Economics 121285, London School of Economics and Political Science, LSE Library.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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