IDEAS home Printed from https://ideas.repec.org/p/ags/pugtwp/331075.html
   My bibliography  Save this paper

Is International Trade Guilty for an Enlarging Wage Differential? A Dynamic Intertemporal General Equilibrium Model

Author

Listed:
  • Chang, Hsiao-Chuan

Abstract

There is much literature on the link between international trade, productivity growth and wage differential of skilled and unskilled labor. The theoretical and empirical research is mainly based on the Heckscher-Ohlin framework and on cases of large countries. More comprehensive theoretical models are needed to guide further empirical research. This paper contributes to the debate by constructing a dynamic intertemporal general equilibrium (DIGE) model incorporating endogenous skill formation. Both the short- and long-run transition mechanism with shocks can be illustrated. Also, it proposes education as an important factor in the determination of the wage differential. The result supports the argument that trade has a responsibility for an increased wage differential. A cut in government education investment tends to enlarge the wage differential. In contrast to the existing literature, this paper suggests that productivity growth may not be the cause of an enlarged wage differential in the long run.

Suggested Citation

  • Chang, Hsiao-Chuan, 2003. "Is International Trade Guilty for an Enlarging Wage Differential? A Dynamic Intertemporal General Equilibrium Model," Conference papers 331075, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:331075
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/331075/files/979.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McDaniel, Christine A. & Balistreri, Edward J., 2002. "A Discussion on Armington Trade Substitution Elasticities," Working Papers 15856, United States International Trade Commission, Office of Economics.
    2. Ballard, Charles L. & Fullerton, Don & Shoven, John B. & Whalley, John, 2009. "A General Equilibrium Model for Tax Policy Evaluation," National Bureau of Economic Research Books, University of Chicago Press, number 9780226036335, September.
    3. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "Introduction to "A General Equilibrium Model for Tax Policy Evaluation"," NBER Chapters, in: A General Equilibrium Model for Tax Policy Evaluation, pages 1-5, National Bureau of Economic Research, Inc.
    4. Fullerton, Don, 1991. "Reconciling Recent Estimates of the Marginal Welfare Cost of Taxation," American Economic Review, American Economic Association, vol. 81(1), pages 302-308, March.
    5. Soamiely Andriamananjara & Russell Hillberry, 2001. "Regionalism, Trade And Growth: The Case Of The Eu-South Africa Free Trade Arrangement," International Trade 0108001, University Library of Munich, Germany.
    6. Hertel, Thomas, 1997. "Global Trade Analysis: Modeling and applications," GTAP Books, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, number 7685, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li Yingzhu & Su Bin & Shi Xunpeng, 2017. "Economic, Social, and Environmental Impacts of Energy Subsidies: A Case Study of Malaysia," Chapters, in: Han Phoumin & Shigeru Kimura (ed.), Institutional Policy and Economic Impacts of Energy Subsidies Removal in East Asia, chapter 2, pages 15-32, Economic Research Institute for ASEAN and East Asia (ERIA).
    2. Zhai, Fan, 2008. "Armington Meets Melitz: Introducing Firm Heterogeneity in a Global CGE Model of Trade," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 23, pages 575-604.
    3. Iain Fraser & Robert Waschik, 2010. "The Double Dividend Hypothesis in a CGE Model: Specific Factors and Variable Labour Supply," Working Papers 2010.02, School of Economics, La Trobe University.
    4. McKibbin, Warwick J. & Wilcoxen, Peter J., 1998. "The theoretical and empirical structure of the G-Cubed model," Economic Modelling, Elsevier, vol. 16(1), pages 123-148, January.
    5. Snow, Arthur & Warren, Ronald Jr., 1996. "The marginal welfare cost of public funds: Theory and estimates," Journal of Public Economics, Elsevier, vol. 61(2), pages 289-305, August.
    6. Thomas W. Hertel & Jeffrey J. Reimer, 2006. "Predicting the Poverty Impacts of Trade Reform," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    7. Li, Yingzhu & Shi, Xunpeng & Su, Bin, 2017. "Economic, social and environmental impacts of fuel subsidies: A revisit of Malaysia," Energy Policy, Elsevier, vol. 110(C), pages 51-61.
    8. Hanson, Kenneth A. & Robinson, Sherman, 1989. "Data, Linkages, And Models: U.S. National Income And Product Accounts In The Framework Of A Social Accounting Matrix," Staff Reports 278155, United States Department of Agriculture, Economic Research Service.
    9. Francesco Felici & Maria Gesualdo, 2014. "ORANI-IT: a computable general equilibrium model of Italy," Working Papers 7, Department of the Treasury, Ministry of the Economy and of Finance.
    10. Brücker, Herbert & Kohlhaas, Michael, 2004. "International Migration to Germany: A CGE-Analysis of Labour Market Impact," Conference papers 331276, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    11. Heyndrickx, Christophe & Ivanova, Olga & Vanherle, Kris, 2008. "On the construction and first empirical application of the new European Model for the Assessment of Environmental, Economic and Social effects of Sustainability Policies (EDIP)," Conference papers 330240, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    12. Pizer, William A. & Burtraw, Dallas & Harrington, Winston & Newell, Richard G. & Sanchirico, James N., 2005. "Modeling Economywide versus Sectoral Climate Policies Using Combined Aggregate-Sectoral Models," Discussion Papers 10502, Resources for the Future.
    13. Isaac Dadson & Ryuta Ray Kato, 2015. "Remittances and the Brain Drain in Ghana: A Computable General Equilibrium Approach," Working Papers EMS_2015_04, Research Institute, International University of Japan.
    14. Govinda R. Timilsina & Ram M. Shrestha, 2002. "General equilibrium analysis of economic and environmental effects of carbon tax in a developing country: case of Thailand," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 5(3), pages 179-211, September.
    15. K Wernstedt, 1995. "Regional Environmental Policy and the Distribution of Economic Impacts among Rural Households," Environment and Planning A, , vol. 27(4), pages 645-662, April.
    16. Andreas PEICHL, 2008. "The Benefits of Linking CGE and Microsimulation Models - Evidence from a Flat Tax analysis," EcoMod2008 23800106, EcoMod.
    17. Wiese, Arthur M., 1994. "Contructing Data for Use in Applied General Equilibrium Models from the U.S. National Income and Product Accounts: An ERS Data Base," Staff Reports 278749, United States Department of Agriculture, Economic Research Service.
    18. Manuel Alejandro Cardenete & Ferran Sancho, 2012. "The Role Of Supply Constraints In Multiplier Analysis," Economic Systems Research, Taylor & Francis Journals, vol. 24(1), pages 21-34, June.
    19. Keshab Bhattarai, 2007. "Welfare impacts of equal-yield tax reforms in the UK economy," Applied Economics, Taylor & Francis Journals, vol. 39(12), pages 1545-1563.
    20. Grubert, Harry & Mackie, James B. III, 2000. "Must Financial Services Be Taxed Under a Consumption Tax?," National Tax Journal, National Tax Association;National Tax Journal, vol. 53(1), pages 23-40, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:pugtwp:331075. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/gtpurus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.