Multi-dimensional skills and matching: implications for international trade and wage inequality

Chihiro Inaba

Abstract


Workers have various kinds of skills and abilities in different amounts and proportions.The technology of firms in an industry is also characterized by a certain skill combination. The combinations of skills supplied by workers are often not the same as those demanded by firms---there can be mismatches between the skills supplied by workers and those demanded by firms. This kind of mismatches can cause both inter- and intra-industry wage inequalities.

 With two countries that have two industries and different skill distribution, international trade has a portion of the workers to move to a industry with a higher wage income than by remaining in the former industry. However, the moving workers who are matched with less appropriate firms may receive a lower wage income than in autarky.


Keywords


multi-dimensional skills; skill mismatch; international trade; income inequality

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DOI: http://dx.doi.org/10.5202/rei.v10i2.296

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