Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70253
Authors: 
Blanchard, Emily
Willmann, Gerald
Year of Publication: 
2013
Series/Report no.: 
Kiel Working Paper 1831
Abstract: 
We develop a new model of trade in which educational institutions drive comparative advantage and determine the distribution of human capital within and across countries. Our framework exploits a multiplicity of sectors and the continuous support of human capital choices to demonstrate that freer trade can induce crowding out of the middle occupations towards the skill acquisition extremes in one country, and simultaneous expansion of middle-income industries in another. Individual gains from trade may be non-monotonic in workers' ability, and middle ability agents can lose the most from trade liberalization. Comparing trade and education policy, we find that targeted education subsidies are more effective than tariffs as a means to preserve middle class jobs, while uniform educational subsidies have no effect.
Subjects: 
Trade and Education Policy
Skill Acquisition
Education
Income Distribution
JEL: 
F11
F13
F15
F16
Document Type: 
Working Paper

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