DP9899 | The Skill Bias of the US Trade Deficit

Publication Date

16/03/2014

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Abstract

We propose a theoretical foundation for a link between North-South trade imbalances and skill upgrading. We provide robust support for our theory using a panel of US manufacturing industries observed between 1977 and 2005. Our results suggest that the impact of the US trade deficit on the relative demand for skills within US industries may dominate that of alternative forces of change, such as trade liberalization, offshoring and technical change.