Events

CARF Seminar

Fri, Jan 17, 2025

55th CARF Seminar: Does Skill Abundance Still Matter? The Evolution of Comparative Advantage in the 21st Century

Date and Time

Friday, January 17, 2025 10:30 – 12:00

Venue

Online (Zoom)

Co-host

Macroeconomics Workshop 2024 (CIRJE)

Speaker

Shinnosuke Kikuchi (Massachusetts Institute of Technology)

Title

Does Skill Abundance Still Matter?
The Evolution of Comparative Advantage in the 21st Century

Abstract

This paper documents that skill-abundant countries no longer have a comparative advantage in skill-intensive sectors. While this empirical relationship was strong in the 1980s, it weakened in the 1990s and disappeared by the 2000s. The decline is more pronounced in countries and sectors with higher automation. I find no such heterogeneous effects among countries and sectors more exposed to offshoring. Using a quantitative trade model incorporating automation and offshoring, I confirm that the observed changes in automation can account for the evolution of comparative advantage while observed changes in offshoring cannot. I conclude by revisiting the relationships between globalization, technology, and inequality through this model. Automation increases skill premia in developed countries with high automation and also raises welfare globally, whereas offshoring leads to smaller, more evenly distributed welfare gains.