If free trade makes the prices of the goods produced by high-skill workers relatively cheaper in South compared to autarky, then inequality must go down in South. Deardorff (2001) argues that fragmentation may lead to increased FPE and therefore that GVCs will lead to a reduction in global inequality. In this environment, if free trade makes the prices of the intermediate goods used by high-skill workers relatively cheaper in South compared to autarky, then this tends to increase inequality.”