Article: Krugman's conundrum; Economics focus.(Does trade boost inequality)(Paul Krugman)

The elusive link between trade and wage inequality

"THIS paper is the manifestation of a guilty conscience." With those words, Paul Krugman began the recent presentation of his new study of trade and wages at the Brookings Institution. Mr Krugman, a leading trade economist (as well as a New York Times columnist), had concluded in a 1995 Brookings paper* that trade with poor countries played only a small role in America's rising wage inequality, explaining perhaps one-tenth of the widening income gap between skilled and unskilled workers during the 1980s. Together with several studies in the mid-1990s that had similar findings, Mr Krugman's paper convinced economists that ...

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