Trade-Induced Structural Change and the Skill Premium
Javier Cravino () and
American Economic Journal: Macroeconomics, 2019, vol. 11, issue 3, 289-326
We study how international trade affects manufacturing employment and the relative wage of unskilled workers when goods and services are traded with different intensities. Manufacturing trade reduces manufacturing prices worldwide, which reduces manufacturing employment if manufactures and services are complements. International trade also raises real income, which reduces manufacturing employment if services are more income elastic than manufactures. Manufacturing production is unskilled-labor-intensive, so that these changes increase the skill premium. We incorporate these mechanisms in a quantitative trade model and show that reductions in trade costs had a negative impact on manufacturing employment and the relative wage of unskilled workers.
JEL-codes: F16 J24 J31 L60 (search for similar items in EconPapers)
Note: DOI: 10.1257/mac.20170434
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Working Paper: Trade-Induced Structural Change and the Skill Premium (2017)
Working Paper: Trade Induced Structural Change and the Skill Premium (2017)
Working Paper: Trade-Induced Structural Change and the Skill Premium (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:aea:aejmac:v:11:y:2019:i:3:p:289-326
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