ABSTRACT This paper studies the impact of trade openness on welfare through alterations in workers' skill acquisition. Guided by empirical evidence, we integrate endogenous choices of learning investments into a multisector Eaton–Kortum model. Our model reveals that trade openness influences skill acquisition by two channels: (1) reallocating labor between sectors with varying skill intensities and on‐the‐job learning opportunities and (2) allowing producers in each country to source varieties from more cost‐effective suppliers in other countries, thus reducing costs of material inputs for learning. Our quantification indicates that the gains in skill acquisition account for 5% of the total gains from trade.
Ma et al. (Tue,) studied this question.