This article suggests that international trade, even between identical countries, can raise the relative demand for skilled labour. It shows that a simple generalisation of <link rid="b37">Krugman's (1979)</link> model of trade in differentiated products has implications for the skill premium, through economies of...

This paper investigates the relationship between trade openness and the size of governments, both theoretically and empirically. We argue that openness can increase the size of governments through two channels: (1) a terms of trade externality, whereby trade lowers the domestic cost of taxation,...