Skill, Trade, and International Inequality

Adrian Wood and Cristobal Ridao-Cano

Oxford Economic Papers, 1999, vol. 51, issue 1, 89-119

Abstract: Heckscher-Ohlin trade theory suggests that greater openness tends to enlarge intercountry differences in stocks of skill (or human capital), which new growth theory suggests would cause intercountry divergence of per capita incomes. Econometric analysis of data on about ninety countries during 1960-90 confirms that greater openness tends to cause divergence of secondary and tertiary enrollment rates between more-educated and less-educated countries and also between land-scarce and land-abundant countries. These findings may have implications for the optimal choice of trade policies by poor countries. Copyright 1999 by Royal Economic Society.

Date: 1999
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