FOREIGN COMPETITION, MARKET POWER, AND WAGE INEQUALITY

This paper investigates the link between the trend in the returns to e ducation and foreign competition in concentrated industries. We argue that the impact of foreign competition on the relative wages of less s killed workers depends on the market structure of the industry penetra ted. The empirical evidence indicates that employment changes in a sma ll group of trade-impacted concentrated industries can explain not onl y part of the aggregate rise in wage inequality in the United States, but also some of the differences in the trends in wage inequality acro ss metropolitan areas.