This paper reexamines observed international differences in the price of services and the positive correlation of these with per capita GDP differences. Using a general trade model with a nontraced sector, the authors find that differences in countries' factor endowments, populations, trade policies, and trade balances will have ambiguous and sometimes opposite effects on their service prices and real incomes. Estimating the service-price equation using recent data suggests that larger endowments of agricultural land, minerals, and capital, larger trade deficits, and higher prices for tradables increase service prices. Conversely, larger populations and labor forces reduce service prices. Copyright 1991 by American Economic Association.
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Volume (Year): 81 (1991) Issue (Month): 5 (December) Pages: 1295-309 Download reference. The following formats are available: HTML
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Robert E. Lipsey & Birgitta Swedenborg, 1999.
"Wage Dispersion and Country Price Levels,"
NBER Chapters,
in: International and Interarea Comparisons of Income, Output, and Prices, pages 453-477
National Bureau of Economic Research, Inc.
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