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Can international factor mobility reduce wage inequality in a dual economy?
S YABUUCHI,
Published in WILEY-BLACKWELL
2008
Volume: 16
   
Issue: 5
Pages: 893 - 903
Abstract
This paper analyzes the consequences of international factor movements on the skilled-unskilled wage inequality in a dual-economy set-up that includes unemployment and three intersectorally mobile factors of production-unskilled labor, skilled labor, and capital. Thus far, theoretical literature on this subject has adopted the full-employment framework and hence ignored the problem of unemployment. The analysis in this paper reveals that the results crucially depend on the difference in the intersectoral factor intensities between skilled labor and capital. In particular, it demonstrates the existence of a possibility of deterioration in wage inequality following foreign unskilled-labor inflow. © 2008 The Authors Journal compilation © 2008 Blackwell Publishing Ltd.
About the journal
JournalData powered by TypesetReview of International Economics
PublisherData powered by TypesetWILEY-BLACKWELL
ISSN0965-7576