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Gradual globalization and inequality between and within countries

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  • Satya Das

Abstract

This paper investigates the effects of gradual trade liberalization on intra-country and inter-country inequality. It assumes two countries, North and South, and two factors, skilled labour and unskilled labour. North is defined as the one that is relatively skilled-labour abundant and larger. A marginal trade liberalization from autarky is shown to (a) increase (decrease) in skilled-unskilled wage differential in the North (South) and (b) raise the inequality between North and South. As the global economy approaches free trade, a marginal trade liberalization has effects, which are the of (a) and (b); that is, the relative wage in the North and in the South, and North-South inequality decreases.

Suggested Citation

  • Satya Das, 2005. "Gradual globalization and inequality between and within countries," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 852-869, August.
    • Handle: RePEc:cje:issued:v:38:y:2005:i:3:p:852-869
    DOI: 10.1111/j.0008-4085.2005.00305.x
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