A rising skill premium in two countries can be explained by the Heckscher-Ohlin model assuming a "skill intensity reversal". This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called "factor intensity reversal". We now show clear-cut...

The number of firms and the wage inequality increased in U.S. manufacturing industries after the Carter/Reagan deregulation was implemented. By extending a variety model, this paper provides a possible theoretical explanation for this observation on the basis of fixed cost.