Skill acquisition and the dynamics of trade-induced inequality

Eliav Danziger

Journal of International Economics, 2017, vol. 107, issue C, 60-74

Abstract: I develop and calibrate a dynamic general-equilibrium trade model with endogenous skill demand and supply. Simulations show that removing US trade barriers would lead to aggregate gains in the United States of 4.5%. Individual workers' gains, however, depend on their education, age and birth cohort. The biggest winners, the oldest educated workers alive during trade liberalization, gain 6.7%, while their uneducated peers gain the least, only 1.2%. A major finding is that ignoring either the endogeneity of the skill supply or the post-liberalization dynamics, as the existing literature does, leads to a substantial bias in the quantitative assessment of trade liberalization.

Keywords: Trade liberalization; Wage inequality; Skill premium; Education (search for similar items in EconPapers)
JEL-codes: F16 F66 I24 J24 J31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:107:y:2017:i:c:p:60-74

DOI: 10.1016/j.jinteco.2017.03.006

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