The impact of trade margins on the skill premium: Evidence from Mexico

Manoj Atolia () and Yoshinori Kurokawa

Journal of Policy Modeling, 2016, vol. 38, issue 5, 895-915

Abstract: This paper formulates a static applied general equilibrium model of a small open economy and then calibrates it to the Mexican input–output matrix for 1987. We use the calibrated model to quantify how much of the dramatic rise in the skill premium over the period 1987–1994, following the liberalization of the trade policy in Mexico, can be accounted for by the change in the extensive margin of trade or trade variety. Our numerical experiments show that the increase in the extensive margin of Mexican manufactured trade with the U.S. can account for up to approximately 12 percent of the actual increase in skill premium in Mexico from 1987 to 1994.

Keywords: Trade liberalization; Trade variety; Skill premium; Applied general equilibrium; Mexico (search for similar items in EconPapers)
JEL-codes: F12 F16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico (2008)
Working Paper: Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:38:y:2016:i:5:p:895-915

DOI: 10.1016/j.jpolmod.2016.03.007

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