Trade, technology and UK wage inequality

This paper examines the impact of international trade and technical change on changes in the UK skill premium. We first measure trade as changes in pr oduct prices and technical change as TFT growth. Then we relate price and T FP changes to a set of underlying forces. Among our results are (a) changes in prices, not TFT, were the major force behind the rise in inequality in the 1980s; (b) changes in OECD prices and UK tariffs significantly raised 1 980s skill premia through their effects on prices, and that industry concen tration significantly raised 1980s skill premia through its effect on TFP.