Skill Dispersion and Trade Flows / Matilde Bombardini, Giovanni Gallipoli, Germán Pupato.

Format:

Book

Author/Creator:

Bombardini, Matilde.

Contributor:

National Bureau of Economic Research.

Gallipoli, Giovanni.

Pupato, Germán.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15097.

NBER working paper series no. w15097

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

Is skill dispersion a source of comparative advantage? While it is established that a country's aggregate endowment of human capital is an important determinant of comparative advantage, this paper investigates whether the distribution of skills in the labor force can play a role in the determination of trade flows. We develop a multi-country, multi-sector model of trade in which comparative advantage derives from (i) differences across sectors in the complementarity of workers' skills, (ii) the dispersion of skills in the working population. First, we show how higher dispersion in human capital can trigger specialization in sectors characterized by higher substitutability among workers' skills. We then use industry-level bilateral trade data to show that human capital dispersion, as measured by a standard international metric, has a significant effect on trade flows. We find that the effect is of a magnitude comparable to that of aggregate endowments. The result is robust to the introduction of several controls for other proximate causes of comparative advantage.

Notes:

Print version record

June 2009.