Munich Personal RePEc Archive

Skill Bias, Trade, and Wage Dispersion

Monte, Ferdinando (2009): Skill Bias, Trade, and Wage Dispersion.

This is the latest version of this item.


Download (514kB) | Preview


Wage ratios between different percentiles of the wage distribution have moved in parallel and then diverged in the U.S. in the last 50 years. In this paper, I study the theoretical response of wage ratios to skill-biased technical change and trade integration. I build a simple model of heterogeneous technology and workers that features complementarities between the quality of ideas and abilities. I show that both shocks can reproduce the observed pattern since (i) they have similar asymmetric effects on productive vs. unproductive firms, and (ii) positive assortative matching in the labor market transmits this asymmetry across high and low skill workers. Focusing on the different channels through which skill-biased technical change and trade integration operate suggests ways to disentangle the magnitude of each.

Available Versions of this Item

MPRA is a RePEc service hosted by
the Munich University Library in Germany.