Since the expansion of world trade in the 1980s, measures of inequality have risen not only in developed countries, but also throughout the developing world. This stylized fact is contrary to the predictions of classical trade theory that in countries with high endowments of unskilled labor,...

This paper shows that increasing product market competition can have a direct impact on the employment relationship and on wage inequality. I develop a simple model in which an increase in product market competition increases returns to skill through the effect of competition on the sensitivity...

This paper shows that increasing product market competition can have a direct impact on the employment relationship and on wage inequality. I develop a simple model in which an increase in product market competition increases returns to skill through the effect of competition on the sensitivity...

We use a large sample of German workers to analyze the effect of low-wage competition with China and Eastern Europe (the East) on the wage structure within German manufacturing industries. Utilizing the method by Abowd et al. (1999), we decompose wages into firm and worker components. We find...