Jump to ContentJump to Main Navigation
The Factory-Free EconomyOutsourcing, Servitization, and the Future of Industry$
Users without a subscription are not able to see the full content.

Lionel Fontagné and Ann Harrison

Print publication date: 2017

Print ISBN-13: 9780198779162

Published to Oxford Scholarship Online: April 2017

DOI: 10.1093/acprof:oso/9780198779162.001.0001

Show Summary Details
Page of

PRINTED FROM OXFORD SCHOLARSHIP ONLINE (www.oxfordscholarship.com). (c) Copyright Oxford University Press, 2019. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 20 October 2019

The Skill Bias of the US Trade Deficit

The Skill Bias of the US Trade Deficit

(p.197) 7 The Skill Bias of the US Trade Deficit
The Factory-Free Economy

Rosario Crinò

Paolo Epifani

Oxford University Press

In Chapter 7, Crino and Epifani suggest that large and rising global trade imbalances (e.g. the US with China) have directly led to rising wage inequality in industrial countries. They argue that trade deficits in industrial countries and surpluses in lower-skilled countries explain increases in demand for skill in both regions. Hanson and Feenstra showed that, with offshoring, capital flowing from a skill-intensive Northern country to the South could result in greater inequality in both countries. The intuition is that the South produces a greater set of skill-intensive goods, which can be traded, narrowing the set of skill-intensive goods in which the North has a comparative advantage. Crino and Epifani apply the same intuition to a trade surplus in the South (and resulting trade deficit in the North) and show that this also leads to greater demand for skill in both regions. They show using US data that the results are consistent with their theory while also ruling out other explanations for increasing skill intensity, such as skill-biased technical change.

Keywords:   Trade imbalances trade surplus, China, wage inequality, offshoring, skill-biased technical change

Oxford Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us .