Tariff reductions, trade patterns and the wage gap

Francesco Di Comite, Antonella Nocco and Gianluca Orefi Ce ()
Additional contact information
Gianluca Orefi Ce: CEPII
Authors registered in the RePEc Author Service: Gianluca Orefice

No 2015004, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

Abstract: This paper studies the impact of trade liberalization on labor market outcomes. First, we find that bilateral trade liberalization does not affect exports towards third countries. To accommodate this novel result, we deviate from existing literature and rely on a three-country monopolistic competition framework with variable elasticity of substitution and vertical linkages in fixed costs. The resulting model predicts that trade liberalization is associated with an increase in the skill-driven wage gap and a reduction in unskilled employment. This prediction is empirically validated using EU-KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.

Keywords: PTAs; Vertical linkages; Trade diversion; Trade creation; Wage gap (search for similar items in EconPapers)
JEL-codes: F12 F16 J31 (search for similar items in EconPapers)
Pages: 48
Date: 2015-02-11
New Economics Papers: this item is included in nep-int, nep-lma and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://sites.uclouvain.be/econ/DP/IRES/2015004.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:2015004

Access Statistics for this paper

More papers in LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES) Place Montesquieu 3, 1348 Louvain-la-Neuve (Belgium). Contact information at EDIRC.
Bibliographic data for series maintained by Virginie LEBLANC ().