Selection into trade and wage inequality

Thomas Sampson

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper analyzes how intra-industry trade affects the wage distribution when both workers and firms are heterogeneous. Positive assortative matching between worker skill and firm technology generates an employer size-wage premium and an exporter wage premium. Fixed export costs cause the selection of advanced technology, high-skill firms into exporting, and trade shifts the firm technology distribution upwards. Consequently, trade increases skill demand and wage inequality in all countries, both on aggregate and within the upper tail of the wage distribution. This holds when firms receive random technology draws and when technology depends on firmlevel R&D.

JEL-codes: F16 J23 J24 J31 (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (87)

Published in American Economic Journal: Microeconomics, 2014, 6(3), pp. 157-202. ISSN: 1945-7669

Downloads: (external link)
http://eprints.lse.ac.uk/59287/ Open access version. (application/pdf)

Related works:
Journal Article: Selection into Trade and Wage Inequality (2014)
Working Paper: Selection into Trade and Wage Inequality (2012)
Working Paper: Selection into trade and wage inequality (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:59287

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager (lseresearchonline@lse.ac.uk).