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Specialization, The Intermediate Nature Of Traded Products And The Myth Of Import Driven Wage Inequality In The United States

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  • Christis G. Tombazos

Abstract

. Using a model that recognises the prevalent cross‐country specialization in production and the intermediate nature of all traded products, I investigate the effect of observed trends in the prices of ordinary intermediate and semi‐final imports on the expanding wage differential between skilled and unskilled labour in the USA. Contrary to widely accepted stylised facts, my results suggest that decreases in import prices increase both wage rates, while compressing their differential. Sources of wage dispersion are, however, found in skill‐biased economy‐wide dynamic processes of capital accumulation and technical change.

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  • Christis G. Tombazos, 2007. "Specialization, The Intermediate Nature Of Traded Products And The Myth Of Import Driven Wage Inequality In The United States," Pacific Economic Review, Wiley Blackwell, vol. 12(1), pages 117-128, February.
    • Handle: RePEc:bla:pacecr:v:12:y:2007:i:1:p:117-128
    DOI: 10.1111/j.1468-0106.2007.00344.x
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    Cited by:

    1. Elie Appelbaum & Ulrich Kohli, 1997. "Import Price Uncertainty And The Distribution Of Income," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 620-630, November.
    2. Christis G. Tombazos, 2010. "Trade and Wage Inequality in a World of Incomplete Diversification," Chapters, in: Noel Gaston & Ahmed M. Khalid (ed.), Globalization and Economic Integration, chapter 8, Edward Elgar Publishing.
    3. Yew‐Kwang Ng & Guang‐Zhen Sun, 2007. "Economics Of Endogenous Specialization: Introduction," Pacific Economic Review, Wiley Blackwell, vol. 12(1), pages 63-67, February.
    4. Huy Quang Vu, 2012. "Imports and the demand for skilled and unskilled labour - the Australian experience," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 15(1), pages 37-55.

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