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Public infrastructure provision and skilled–unskilled wage inequality in developing countries

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  • Pi, Jiancai
  • Zhou, Yu

Abstract

In this paper, we develop several static three-sector general equilibrium models with diverse labor market structures to investigate the effects of government provision of public infrastructure on the skilled–unskilled wage inequality in developing countries. The basic full employment model shows that the production sectors' relative dependence on the public infrastructure provision plays a crucial role in determining the skilled–unskilled wage inequality. Different relative dependences on public infrastructure may even result in opposite changes in the skilled–unskilled wage inequality. The above results are robust even when we extend the basic full employment model to three fundamentally different cases.

Suggested Citation

  • Pi, Jiancai & Zhou, Yu, 2012. "Public infrastructure provision and skilled–unskilled wage inequality in developing countries," Labour Economics, Elsevier, vol. 19(6), pages 881-887.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:6:p:881-887
    DOI: 10.1016/j.labeco.2012.08.007
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    More about this item

    Keywords

    Public infrastructure; Skilled labor; Unskilled labor; Wage inequality; Labor market structure;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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