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Wage Differentials and Factor Intensity Reversais

Author

Listed:
  • Barone, Adriana

    (Istituto di Studi Economici, Istituto Universitario Navale)

  • Vinci, Concetto Paolo

    (Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno)

Abstract

In this paper we consider the Bhagwati and Srinivasan model (1971) which takes into account the impact of wage differentials on production response and factor price equalization theorem. We modify it introducing the distinction between skilled and unskilled workers and the existence in each sector of a union which all the workers, skilled and unskilled, are members of. The most interesting result concerns the relationship between factor intensity and wage rewards: the main theorems of international trade do not hold if in the skilled (unskilled) labour intensive sector skilled (unskilled) workers have a greater power within the union compared to that of the unskilled (skilled) workers.

Suggested Citation

  • Barone, Adriana & Vinci, Concetto Paolo, 1997. "Wage Differentials and Factor Intensity Reversais," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 50(4), pages 497-510.
    • Handle: RePEc:ris:ecoint:0319
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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