Access the full text.
Sign up today, get DeepDyve free for 14 days.
Loading next page...
/lp/american-economic-association/trade-induced-structural-change-and-the-skill-premium-Ff7Mr4OUvm
- Publisher
- American Economic Association
- Copyright
- Copyright © 2019 © American Economic Association
- ISSN
- 1945-7715
- DOI
- 10.1257/mac.20170434
- Publisher site
- See Article on Publisher Site
Abstract
AbstractWe study how international trade affects manufacturing employment and the relative wage of unskilled workers when goods and services are traded with different intensities. Manufacturing trade reduces manufacturing prices worldwide, which reduces manufacturing employment if manufactures and services are complements. International trade also raises real income, which reduces manufacturing employment if services are more income elastic than manufactures. Manufacturing production is unskilled-labor-intensive, so that these changes increase the skill premium. We incorporate these mechanisms in a quantitative trade model and show that reductions in trade costs had a negative impact on manufacturing employment and the relative wage of unskilled workers. (JEL F16, J24, J31, L60)
Journal
American Economic Journal: Macroeconomics – American Economic Association
Published: Jul 1, 2019