Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/125423
Authors: 
Cigno, Alessandro
Year of Publication: 
2015
Citation: 
[Journal:] IZA World of Labor [ISSN:] 2054-9571 [Year:] 2015 [Issue:] 193
Abstract: 
Liberalization of foreign trade and investment raises the domestic ratio of skilled to unskilled wages (skill premium) if the country has a sufficiently well-educated workforce, but lowers it otherwise. Wide wage inequality is undesirable on equity grounds, especially in poor countries where the bottom wage is close to the breadline; but it gives parents an incentive to invest in their children’s education. The incentive will be ineffective, however, if parents cannot borrow for their child’s education because of underdeveloped credit markets or because they are too poor to finance the investment from their own income and savings.
Subjects: 
trade openness
offshoring
skill endowments
skill premium
JEL: 
F16
J24
Persistent Identifier of the first edition: 
Document Type: 
Article

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