Trade Within OECD Countries and Skill Premia

Saibal Kar and Shaswata Ray

The World Economy, 2025, vol. 48, issue 10, 2295-2313

Abstract: While wage inequality between skilled and unskilled workers arising from North–South trade, migration and technology is extensively studied, the impact of trade between OECD countries on skill premia is relatively less explored. This paper uses EU KLEMS data for a panel of 24 OECD countries between 2008 and 2017 to show that trade invariably raises wage premia in these countries. We also include country‐specific technology upgrades, within OECD immigration and foreign capital inflow to buttress the claim that trade within OECD lowers unskilled wage in particular. The wage premia estimates for male workers are considerably stronger and more robust as compared to female workers. However, the gender pay disparity in OECD countries for skilled workers falls with more trade and better technology.

Date: 2025
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