Abstract
I present an endogenous growth model with trade, relative wages and Schumpeterian growth. Firms improve upon existing products and intra-industry heterogeneity determines which markets they penetrate. What distinguishes this paper from the earlier literature is that wage inequality is addressed in a heterogeneous firm setting with quality ladders. The model finds support for trade as a channel for increasing wage inequality despite the absence of a Stolper-Samuelson mechanism.