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Market size and wages

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  • Zhou, Yiming

Abstract

This paper builds a simple three-country model with different market sizes and non-constant wages. We shed light on the evolution patterns of wages in middle-sized countries in the process of trade liberalization. We analytically disclose that, while the wage inequality between the large and the small countries first diverges and then converges in trade liberalization, the evolution patterns of wages in the middle-sized country are largely diversified, depending on the relative market sizes of countries.

Suggested Citation

  • Zhou, Yiming, 2019. "Market size and wages," Economics Letters, Elsevier, vol. 174(C), pages 153-156.
    • Handle: RePEc:eee:ecolet:v:174:y:2019:i:c:p:153-156
    DOI: 10.1016/j.econlet.2018.11.015
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    References listed on IDEAS

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    1. Kato, Hayato & Okubo, Toshihiro, 2018. "Market size in globalization," Journal of International Economics, Elsevier, vol. 111(C), pages 34-60.
    2. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    3. Toshiaki Takahashi & Hajime Takatsuka & Dao-Zhi Zeng, 2013. "Spatial inequality, globalization, and footloose capital," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 213-238, May.
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    Cited by:

    1. Bi, Qingmiao & Hang, Jing & Zhou, Mohan, 2021. "Human capital and average firm size," Economics Letters, Elsevier, vol. 204(C).
    2. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.

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    More about this item

    Keywords

    Market size; Wages; Middle-sized country;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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