Trade-induced Skill Polarization

Grace W Gu, Samreen Malik, Dario Pozzoli, Vera Rocha

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We study how wage gaps across skills and the skill distribution in an economy respond to trade integration. Using administrative data of Denmark (1995–2011), we find that trade has a negative effect on the wage gap between secondary and primary education and a positive effect on the wage gap between tertiary and secondary education. We also show that trade affects skill distribution and induces skill polarization: trade has a positive effect on both the mean and standard deviation of skills. Wage‐gap changes induced by trade shocks explain about 21%–30% of the effect of trade on skills.
Original languageEnglish
JournalEconomic Inquiry
Issue number1
Pages (from-to)241-259
Number of pages19
Publication statusPublished - Jan 2020

Bibliographical note

Published online: 02 September 2019

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