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Multi-sector specific factors model with two mobile factors

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  • Dogan, Can
  • Akay, Gokhan H.

Abstract

This paper is an extension of the specific factors model to the study of relative wages by considering a multi-industry model with skilled and unskilled labor as the only mobile factors. We show that for changes in the price of a single industry, the impact on the skill premium is usually modest and sometimes the sign is the reverse of expectations. The elasticity of substitution between factors is critical for single-sector price changes. To generate a Stolper-Samuelson magnification effect, it is necessary to have a large number of price changes across industries intensive in either skilled or unskilled labor.

Suggested Citation

  • Dogan, Can & Akay, Gokhan H., 2016. "Multi-sector specific factors model with two mobile factors," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 136-147.
    • Handle: RePEc:eee:reveco:v:46:y:2016:i:c:p:136-147
    DOI: 10.1016/j.iref.2016.09.002
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    Cited by:

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    2. Lin, Yu-Hsuan, 2021. "A classroom experiment on the specific factors model," International Review of Economics Education, Elsevier, vol. 37(C).
    3. Dogan, Can & Akay, Gokhan H., 2019. "The role of labor endowments on industry output in the short run: Evidence from U.S industries," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 281-291.
    4. Thompson, Henry & Toledo, Hugo, 2022. "Renewable versus nonrenewable energy for Canada in a free trade agreement with China," Energy Economics, Elsevier, vol. 105(C).

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    More about this item

    Keywords

    Specific factors; Stolper-Samuelson theorem; Skill premium;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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