International Trade and Inter-Industry Wage Structure in Swedish Manufacturing: Evidence from Matched Employer-Employee Data

This study examines the inter-industry wage structure in Swedish manufacturing, using matched employer-employee data for the period 1996 to 2000. First, we used detailed individual and job characteristics to estimate industry-specific and time-varying wage premiums. Secondly, we investigated the impact of international trade on wage premiums, controlling for effects of domestic competition and technical progress. Our results suggest that industries that face intensive import competition from low-income countries have lower wage premiums. Surprisingly, the wage premiums are not related to export intensities. Furthermore, technical progress, measured by investment in R&D activity, appears to enhance inter-industry wage premiums.