Effects of North-South trade on wage inequality and on human-capital accumulation

• Type: Article in International Scientific Journal
• Date: 2013

Authors

Óscar Afonso (Author) FEP; Pedro Rui Mazeda Gil (Author) FEP

Journal

Title: Economic Modelling

Vol. 35

Pages: 481-492

ISSN: 0264-9993

Publisher: Elsevier

Indexing

ISI Web of Knowledge - 11 Citations

ISI Web of Science

Scopus - 12 Citations

Scientific classification

FOS: Social sciences > Economics and Business

CORDIS: Social sciences > Economics

Other information

Authenticus ID: P-008-D8E

DOI: 10.1016/j.econmod.2013.07.036

Abstract (EN): This paper develops an endogenous growth model with technological knowledge directed towards high- versus low-skilled labour, augmented with North-South international trade of intermediate goods and with human-capital accumulation, to analyse how trade affects wage inequality and the inter-country human-capital gap. Trade is a vehicle for inter-country technological-knowledge diffusion and human-capital accumulation interacts with the intra-country direction of technological knowledge arising from trade. In contrast with the market-size effect, stressed in the skill-biased technological change literature, the operation of the price channel following openness to trade predicts, in line with the recent trends in developed and developing countries, an increasing technological-knowledge bias towards high-skilled human capital. This, in turn, decreases inter-country gaps of technological knowledge and human capital and increases intra-country wage inequality. Also in line with recent empirical evidence, inter-country wage convergence is induced by the trade-opening level effect.

Language: English

Type (Professor's evaluation): Scientific