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Structural change and wage inequality

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  • Pi, Jiancai
  • Zhang, Pengqing

Abstract

This paper investigates how structural change driven by factor intensity differences affects the skilled-unskilled wage inequality through the three-sector general equilibrium approach. In the basic model, we find that when structural change happens in the urban skilled sector (resp. the urban unskilled sector), the wage inequality will be expanded (resp. narrowed down) if the capital-labor ratio in this sector is larger than one. In the extended models, we introduce urban unemployment and the open capital market separately into the basic model, and find that the main results of the basic model almost still hold.

Suggested Citation

  • Pi, Jiancai & Zhang, Pengqing, 2018. "Structural change and wage inequality," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 699-707.
    • Handle: RePEc:eee:reveco:v:58:y:2018:i:c:p:699-707
    DOI: 10.1016/j.iref.2018.07.010
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    2. John Gilbert & Reza Oladi, 2021. "Labor‐eliminating technical change in a developing economy," International Journal of Economic Theory, The International Society for Economic Theory, vol. 17(1), pages 88-100, March.

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    More about this item

    Keywords

    Structural change; Wage inequality; General equilibrium approach;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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