Abstract

This paper studies the labor market impacts of trade liberalization, and specifically tariff reductions, with a focus on the wage gap between skilled and unskilled workers in presence of vertical linkages in the fixed costs of production. To that purpose, we develop and empirically test a monopolistic competition model with variable elasticity of substitution and labor differentiated by skill level, where skilled workers are the residual claimants of savings on imported inputs. Consistently with the model predictions, we find that a 10% reduction in tariffs implies on average a 3.8% increase in the wage gap. In addition, the same level of tariff reduction is expected to lower unskilled employment in domestic production by 3.3%, which is partially offset by an expansion of unskilled employment in the export segment of production. These results are obtained matching detailed international trade data with World Input–Output Tables and EU KLEMS data on country-sector wage by skill level on 17 OECD countries from 1996 to 2005.

Autore Pugliese

• Nocco Antonella

Tutti gli autori

• Di Comite F. , Nocco A. , Orefice G.

Titolo volume/Rivista

REVIEW OF WORLD ECONOMICS

Anno di pubblicazione

2018

ISSN

1610-2878

ISBN

Non Disponibile

Numero di citazioni Wos

1

Ultimo Aggiornamento Citazioni

27/04/2018

Numero di citazioni Scopus

Non Disponibile

0

Ultimo Aggiornamento Citazioni

26/04/2018

Settori ERC

Non Disponibile

Codici ASJC

Non Disponibile