New goods and the skill premium [An article from: Journal of International Economics]

This digital document is a journal article from Journal of International Economics, published by Elsevier in 2007. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
In a two-cone Heckscher-Ohlin model with CES preferences and a continuum of goods, new northern goods increase the northern skill premium if they are skilled-labor intensive, and may increase the premium if they are unskilled-labor intensive. Thus, the introduction of new goods into US technology could have done more to increase the US skill premium than a closed-economy model would predict. I also explore how new northern goods affect the southern skill premium and what happens if they generate preference-induced reversals across existing goods. I develop a two-step solution method that simplifies comparative static analyses in the two-cone Heckscher-Ohlin model.