Trade, Education, and the Shrinking Middle Class

Blanchard EJ, Willmann G (2013) Bielefeld Working Papers in Economics and Management, 03-2013.
Bielefeld: Bielefeld University, Department of Business Administration and Economics.

Working Paper | Published | English

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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 eff ective than tari ffs as a means to preserve "middle class" jobs, while uniform educational subsidies have no eff ect.
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Blanchard EJ, Willmann G. Trade, Education, and the Shrinking Middle Class. Bielefeld Working Papers in Economics and Management, 03-2013. Bielefeld: Bielefeld University, Department of Business Administration and Economics; 2013.
Blanchard, E. J., & Willmann, G. (2013). Trade, Education, and the Shrinking Middle Class (Bielefeld Working Papers in Economics and Management, 03-2013). Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Blanchard, E. J., and Willmann, G. (2013). Trade, Education, and the Shrinking Middle Class. Bielefeld Working Papers in Economics and Management, 03-2013, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
Blanchard, E.J., & Willmann, G., 2013. Trade, Education, and the Shrinking Middle Class, Bielefeld Working Papers in Economics and Management, 03-2013, Bielefeld: Bielefeld University, Department of Business Administration and Economics.
E.J. Blanchard and G. Willmann, Trade, Education, and the Shrinking Middle Class, Bielefeld Working Papers in Economics and Management, 03-2013, Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2013.
Blanchard, E.J., Willmann, G.: Trade, Education, and the Shrinking Middle Class. Bielefeld Working Papers in Economics and Management, 03-2013. Bielefeld University, Department of Business Administration and Economics, Bielefeld (2013).
Blanchard, Emily J., and Willmann, Gerald. Trade, Education, and the Shrinking Middle Class. Bielefeld: Bielefeld University, Department of Business Administration and Economics, 2013. Bielefeld Working Papers in Economics and Management, 03-2013.
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