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Globalization, International Factor Mobility, and Wage Inequality

Author

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  • Yabuuchi, Shigemi

    (Aichi University)

Abstract

The international movement of economic factors such as capital and skilled labor has complex effects on the economies involved, especially when multiple factors move at the same time. One important effect is the potential change in wage inequality between skilled and unskilled labor—particularly, in developing countries that have agreed to trade with developed countries. This study considers a small open economy with two goods and three factors to determine whether wage inequality increases or decreases due to increased movement of these factors. The key findings are that wage inequality can unambiguously increase and decrease, under certain circumstances regarding the capital intensity of the sector(s), the initial amount of foreign factors, and the shares of factors in national income.

Suggested Citation

  • Yabuuchi, Shigemi, 2015. "Globalization, International Factor Mobility, and Wage Inequality," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 30(3), pages 577-590.
  • Handle: RePEc:ris:integr:0669
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    More about this item

    Keywords

    International Factor Mobility; Wage Inequality; Unemployment;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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