Trade imbalances, export structure and wage inequality

Rosario Crinò, Paolo Epifani

Research output: Journal PublicationArticlepeer-review

8 Citations (Scopus)

Abstract

We study, both theoretically and empirically, how trade imbalances affect the structure of countries' exports and wage inequality. We show that, in a Heckscher-Ohlin model with a continuum of goods, a Southern (Northern) trade surplus leads to an increase (reduction) in the average skill intensity of exports, in the relative demand for skills and in the skill premium in both countries. We provide robust support for the mechanism underlying these predictions using a large panel of countries observed over the past 30 years. Our results suggest that the large and growing North-South trade imbalances arisen over the last three decades may have exacerbated wage inequality worldwide.

Original languageEnglish
Pages (from-to)507-539
Number of pages33
JournalEconomic Journal
Volume124
Issue number576
DOIs
Publication statusPublished - May 2014
Externally publishedYes

ASJC Scopus subject areas

  • Economics and Econometrics

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