Trade-Induced Skill Polarization

Grace Gu, Samreen Malik, Dario Pozzoli, Vera Rocha

Publikation: Working paperForskning

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Resumé

We study how the skill distribution in an economy responds to changes in wage gaps induced by trade integration. Using administrative data for Denmark (1993-2012), we conduct a two-step empirical analysis. In the first step, we predict changes in wage gaps that are triggered by exogenous trade shocks. In the second step, we estimate the impact of such changes on the skill distribution. The main results for Denmark show that both the average and the standard deviation of skills increase as a result of trade integration. We then extend our analysis to Portugal, using its administrative data (1993-2012), to shed light on the potential role the labor market and education policy may play in establishing the feedback effect of trade on the skill distribution. Finally, we provide a theoretical intuition to rationalize both sets of results.
OriginalsprogEngelsk
Udgivelses stedFrederiksberg
UdgiverCopenhagen Business School, CBS
Antal sider57
StatusUdgivet - 2018
NavnDepartment of Economics. Copenhagen Business School. Working paper
Nummer6-2018

Emneord

  • Skill polarization
  • Skill upgrading
  • Trade integration and labor market frictions

Citer dette

Gu, G., Malik, S., Pozzoli, D., & Rocha, V. (2018). Trade-Induced Skill Polarization. Frederiksberg: Copenhagen Business School, CBS. Department of Economics. Copenhagen Business School. Working paper , Nr. 6-2018
Gu, Grace ; Malik, Samreen ; Pozzoli, Dario ; Rocha, Vera. / Trade-Induced Skill Polarization. Frederiksberg : Copenhagen Business School, CBS, 2018. (Department of Economics. Copenhagen Business School. Working paper ; Nr. 6-2018).
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Gu, G, Malik, S, Pozzoli, D & Rocha, V 2018 'Trade-Induced Skill Polarization' Copenhagen Business School, CBS, Frederiksberg.

Trade-Induced Skill Polarization. / Gu, Grace; Malik, Samreen; Pozzoli, Dario ; Rocha, Vera.

Frederiksberg : Copenhagen Business School, CBS, 2018.

Publikation: Working paperForskning

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AU - Gu, Grace

AU - Malik, Samreen

AU - Pozzoli, Dario

AU - Rocha, Vera

PY - 2018

Y1 - 2018

N2 - We study how the skill distribution in an economy responds to changes in wage gaps induced by trade integration. Using administrative data for Denmark (1993-2012), we conduct a two-step empirical analysis. In the first step, we predict changes in wage gaps that are triggered by exogenous trade shocks. In the second step, we estimate the impact of such changes on the skill distribution. The main results for Denmark show that both the average and the standard deviation of skills increase as a result of trade integration. We then extend our analysis to Portugal, using its administrative data (1993-2012), to shed light on the potential role the labor market and education policy may play in establishing the feedback effect of trade on the skill distribution. Finally, we provide a theoretical intuition to rationalize both sets of results.

AB - We study how the skill distribution in an economy responds to changes in wage gaps induced by trade integration. Using administrative data for Denmark (1993-2012), we conduct a two-step empirical analysis. In the first step, we predict changes in wage gaps that are triggered by exogenous trade shocks. In the second step, we estimate the impact of such changes on the skill distribution. The main results for Denmark show that both the average and the standard deviation of skills increase as a result of trade integration. We then extend our analysis to Portugal, using its administrative data (1993-2012), to shed light on the potential role the labor market and education policy may play in establishing the feedback effect of trade on the skill distribution. Finally, we provide a theoretical intuition to rationalize both sets of results.

KW - Skill polarization

KW - Skill upgrading

KW - Trade integration and labor market frictions

KW - Skill polarization

KW - Skill upgrading

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Gu G, Malik S, Pozzoli D, Rocha V. Trade-Induced Skill Polarization. Frederiksberg: Copenhagen Business School, CBS. 2018.