Task

Explain how increasing international trade has come about and how this is argued to have affected wage inequality in developed countries.  (You should explain how the Stolper-Samuelson Theorem is involved here.)  Is there any empirical evidence which either supports or refutes the idea that trade is responsible for the big changes in inequality that we observe?

Many labour economics textbooks will address this issue and you will find useful material in them. Parts of the article by Wood on the reading list are also of interest, particularly the "Theoretical Framework" section, the section on 'Cross Country Trade' and Figure 2.  The paper by Burtless (1995) contains a detailed review of arguments linking wage inequality and international trade.  In addition the paper by Machin contains some analysis which contradicts the view that globalisation is the main reason for rising wage inequality in the UK.  You should explain Machin's approach and outline his results.