Trade, Geography and the Skill Premium in U.S. Manufacturing

15 Pages Posted: 5 Jul 2012

See all articles by John Francis

John Francis

Louisiana Tech University - Department of Economics and Finance

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics

Date Written: July 2012

Abstract

A number of studies have suggested that countries (or regions) with access to larger markets have higher wages. In this paper, we examine whether access to larger markets affects skilled and unskilled workers differently. We develop a model relating two key measures of market size, market and supplier access, to industry value added prices. We then estimate the effects of growth in these measures on factor returns in U.S. manufacturing industries between 1984 and 1996. We find that growth in these measures can explain around 5% of the rise in the skill premium over the sample period.

JEL Classification: F12, F16, L60

Suggested Citation

Francis, John and Zheng, Yuqing, Trade, Geography and the Skill Premium in U.S. Manufacturing (July 2012). Economic Inquiry, Vol. 50, Issue 3, pp. 652-666, 2012, Available at SSRN: https://ssrn.com/abstract=2100663 or http://dx.doi.org/10.1111/j.1465-7295.2010.00351.x

John Francis (Contact Author)

Louisiana Tech University - Department of Economics and Finance ( email )

Yuqing Zheng

University of Kentucky - College of Agriculture - Department of Agricultural Economics ( email )

Lexington, KY 40546
United States

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