Inferring Relative Factor Price Changes from Quantitative Data
This paper considers the appropriateness of using such quantitative measures as changes in the factor content of trade and the behavior of factor proportions within versus among industries to draw inferences about changes in relative factor prices. The conclusion reached is that only under special assumptions are such linkages justified. Using these special assumptions of Cobb-Douglas or CES production functions and preferences, a final section of the paper presents empirical estimates of how trade may have affected the U.S. wage gap between more educated and less educated workers in recent years.
Blomstom, Magnus and Linda Goldberg (eds.) Topics in Empirical International Research: A Festschrift in Honor of Robert E. Lipsey. Chicago: University of Chicago Press, 2001.
Inferring Relative Factor Price Changes from Quantitative Data, Robert E. Baldwin. in Topics in Empirical International Economics: A Festschrift in Honor of Robert E. Lipsey, Blomstrom and Goldberg. 2001