Labor Heterogeneity and Trade Liberalization

This paper identies the decreasing heterogeneity in labor as one of the driving forces ofsecular trade liberalization. A decrease in the sector-specificity of human capital gives rise to a decline of protectionist demands since the workers’ stakes in trade policy resemble more and more the social welfare consequences of trade policy. Since the process of labor homogenization appears to be irreversible, we arrive at the conclusion that protectionist trade polices will soon become an obsolescent model.