A Noteon Terms of Trade Shocks and the Wage Gap

Publication Date:

December 1, 2010

Electronic Access:

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Summary:

Using Chilean data, we document that for resource-rich small open economies the effects of terms of trade shocks on the wage gap (between skilled and unskilled workers) depend on factor intensities in the non-tradable sector, following the model in Galiani, Heymann, and Magud (2010). For a skilled-intensive non-tradable sector we show that improvements in the terms of trade benefit skilled workers. We also show that this relation holds at the industry level: the wage gap widens in skilled-intensive sectors while it shrinks in unskilled-intensive ones, the more so as terms of trade volatility decreases.

Series:

Working Paper No. 2010/279

Subject:

Economic sectors Income distribution International trade Labor Manufacturing National accounts Terms of trade Unskilled labor Wage gap

Frequency:

Monthly

English

Publication Date:

December 1, 2010

ISBN/ISSN:

9781455210862/1018-5941

Stock No:

WPIEA2010279

Pages:

27

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