Another Nail in the Coffin? Or Can the Trade Based Explanation of Changing Skill Structures Be Resurrected?

The skill structure of wages and employment has altered markedly in recent years. In some countries (most notably the UK and the US) wage inequality has risen sharply and in most countries relative demand has shifted unfavourably against the less skilled. In this paper we reassess the evidence that rising international competition from developing countries is the crucial factor underpinning these changes. Our results, based on newly constructed internationally comparable industry data, find little support for the predictions of the basic Heckscher‐Ohlin (H‐O) trade model. JEL classification: J 31; F 14