Publication

This paper examines the effect of trade liberalization on wage inequality. Using a dynamic trade model, the authors show that the effect of trade liberalization on wage inequality depends on 1) the time horizon considered, 2) the degree of worker mobility, and 3) the degree of trade liberalization (partial/full). In the short-run, the authors say that rises in wage inequality are driven by an increase in inter-sectoral wage inequality, while in the long run, wage inequality is driven by an increase in the skill premium.