Liberalization of foreign trade and investment raises the domestic ratio of skilled to unskilled wages (skill premium) if the country has a sufficiently well-educated workforce, but lowers it otherwise. Wide wage inequality is undesirable on equity grounds, especially in poor countries where the...

Relying on linked employer–employee data from the German manufacturing sector in 1996–2010, I study the relation between the share of exporting establishments and the skill premium within narrowly defined industries. I document that the skill premium tends to be higher in industries with a...