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Free Trade and Wage Inequality in an Advanced Economy

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  • Yong-Yil Choi

Abstract

This paper develops a formal model for examining the impact of free trade on the wage inequality in the Northern economy and the sensitivity of wage inequality indices to changes in causal factors within a general equilibrium setting. The model has three types of labor: sector-specific high-skilled, mobile unskilled and immobile unskilled labor. Thus, three types of wage inequality indices are derived. Selected comparative statics for changes in consumer expenditure shares, biased technological changes, changes in relative endowments are provided. Copyright Kluwer Academic Publishers 1998

Suggested Citation

  • Yong-Yil Choi, 1998. "Free Trade and Wage Inequality in an Advanced Economy," Open Economies Review, Springer, vol. 9(4), pages 349-359, October.
    • Handle: RePEc:kap:openec:v:9:y:1998:i:4:p:349-359
    DOI: 10.1023/A:1008317515602
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    References listed on IDEAS

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    1. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(2), pages 367-397.
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    8. Edward E. Leamer, 1996. "In Search of Stolper-Samuelson Effects on U.S. Wages," NBER Working Papers 5427, National Bureau of Economic Research, Inc.
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    10. Wood, Adrian, 1995. "North-South Trade, Employment and Inequality: Changing Fortunes in a Skill-Driven World," OUP Catalogue, Oxford University Press, number 9780198290155.
    11. Mr. Phillip L Swagel & Mr. Matthew J. Slaughter, 1997. "The Effect of Globalization on Wages in the Advanced Economies," IMF Working Papers 1997/043, International Monetary Fund.
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