Standard neo-classical trade theory predicts that trade liberalisation should cause a fall in wage inequality in developing countries through a decrease in the relative demand for skilled labour. Recent studies of a number of developing countries, however, find evidence to the contrary. Using a...

This paper re-examines the trade-based explanation of increased wage inequality in developed countries by focusing on international outsourcing. It is the first detailed study to address the effects of outsourcing on labour markets in the UK. In a recent paper, Feenstra and Hanson (1996)...