It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantified how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static...

It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantified how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static...

The Stolper-Samuelson theorem predicts the relative wage of high-skilled labor will increase in the U.S. but decrease in Mexico after trade, while data shows the skill premium began to rise in both countries during the 1980s. This paper presents a simple trade-based resolution of this “wage...