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American Economic Review: Vol. 102 No. 5 (August 2012)

AER Volume. 102, Issue 5 | Previous ArticleNext Article

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Skill Dispersion and Trade Flows

Article Citation

Bombardini, Matilde, Giovanni Gallipoli, and Germán Pupato. 2012. "Skill Dispersion and Trade Flows." American Economic Review, 102(5): 2327-48.

DOI: 10.1257/aer.102.5.2327

Abstract

Is skill dispersion a source of comparative advantage? In this paper we use microdata from the International Adult Literacy Survey to show that the effect of skill dispersion on trade flows is quantitatively similar to that of the aggregate endowment of human capital. In particular we investigate, and find support for, the hypothesis that countries with a more dispersed skill distribution specialize in industries characterized by lower complementarity of workers' skills. The result is robust to the introduction of controls for alternative sources of comparative advantage, as well as to alternative measures of industry-level skill complementarity. (JEL F14, F16, J24, J31)

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Authors

Bombardini, Matilde (U British Columbia)
Gallipoli, Giovanni (U British Columbia)
Pupato, Germán (Getulio Vargas Foundation, Rio de Janeiro)

JEL Classifications

F14: Country and Industry Studies of Trade
F16: Trade and Labor Market Interactions
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials