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Can International Factor Mobility Reduce Wage Inequality in a Dual Economy?

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  • Hamid Beladi
  • Sarbajit Chaudhuri
  • Shigemi Yabuuchi

Abstract

This paper analyzes the consequences of international factor movements on the skilled-unskilled wage inequality in a dual-economy set-up that includes unemployment and three intersectorally mobile factors of production-unskilled labor, skilled labor, and capital. Thus far, theoretical literature on this subject has adopted the full-employment framework and hence ignored the problem of unemployment. The analysis in this paper reveals that the results crucially depend on the difference in the intersectoral factor intensities between skilled labor and capital. In particular, it demonstrates the existence of a possibility of deterioration in wage inequality following foreign unskilled-labor inflow. Copyright � 2008 The Authors. Journal compilation � 2008 Blackwell Publishing Ltd.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 16 (2008)
Issue (Month): 5 (November)
Pages: 893-903

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Handle: RePEc:bla:reviec:v:16:y:2008:i:5:p:893-903

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Cited by:
  1. Gupta, Manash Ranjan & Dutta, Priya Brata, 2011. "Skilled-unskilled wage inequality and unemployment: A general equilibrium analysis," Economic Modelling, Elsevier, Elsevier, vol. 28(4), pages 1977-1983, July.
  2. Anwar, Sajid & Sun, Sizhong & Valadkhani, Abbas, 2013. "International outsourcing of skill intensive tasks and wage inequality," Economic Modelling, Elsevier, Elsevier, vol. 31(C), pages 590-597.
  3. Pi, Jiancai & Zhou, Yu, 2013. "Institutional quality and skilled–unskilled wage inequality," Economic Modelling, Elsevier, Elsevier, vol. 35(C), pages 356-363.
  4. Mukherjee, Soumyatanu & Zafar, Sameen, 2014. "Technological progress with segmented factor markets and welfare implications for the urban poor," MPRA Paper 55297, University Library of Munich, Germany.
  5. Marjit, Sugata & Kar, Saibal, 2009. "Emigration, Wage Inequality and Vanishing Sectors," MPRA Paper 19354, University Library of Munich, Germany.
  6. Chaudhuri, Sarbajit & Banerjee, Dibyendu, 2009. "Foreign Capital Inflow, Skilled-Unskilled Wage Inequality and Unemployment of Unskilled Labour in a Fair Wage Model," MPRA Paper 18004, University Library of Munich, Germany.
  7. Shigemi Yabuuchi, 2009. "Emigration and wage inequality in a dual economy," Economics Bulletin, AccessEcon, vol. 29(3), pages 1549-1554.
  8. Anwar, Sajid & Rice, John, 2009. "Labour mobility and wage inequality in the presence of endogenous foreign investment," Economic Modelling, Elsevier, Elsevier, vol. 26(6), pages 1135-1139, November.
  9. Chaudhuri, Sarbajit, 2014. "Does Public Assistance for Skills Formation Necessarily Improve Wage Inequality in the Future?," MPRA Paper 57788, University Library of Munich, Germany.
  10. Gupta, Manash Ranjan & Dutta, Priya Brata, 2010. "Skilled-unskilled wage inequality: A general equilibrium analysis," Research in Economics, Elsevier, Elsevier, vol. 64(4), pages 247-263, December.
  11. Zhang, Jingjing, 2012. "Inflow of labour, producer services and wage inequality," Economics Letters, Elsevier, Elsevier, vol. 117(3), pages 600-603.
  12. Pan, Lijun & Zhou, Yu, 2013. "International factor mobility, environmental pollution and skilled–unskilled wage inequality in developing countries," Economic Modelling, Elsevier, Elsevier, vol. 33(C), pages 826-831.
  13. Beladi, Hamid & Chao, Chi-Chur & Hollas, Daniel, 2013. "How growing asset inequality affects developing economies," Journal of Economics and Business, Elsevier, Elsevier, vol. 68(C), pages 43-51.
  14. Pi, Jiancai & Zhou, Yu, 2012. "Public infrastructure provision and skilled–unskilled wage inequality in developing countries," Labour Economics, Elsevier, Elsevier, vol. 19(6), pages 881-887.
  15. Dwibedi, Jayanta & Chaudhuri, Sarbajit, 2011. "Poverty alleviation programs, FDI-led growth and child labour under agricultural dualism," MPRA Paper 29997, University Library of Munich, Germany.
  16. Pi, Jiancai & Zhou, Yu, 2014. "Foreign capital, public infrastructure, and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, Elsevier, vol. 29(C), pages 195-207.
  17. Chaudhuri, Sarbajit, 2010. "Economic recession, demand constraint and labour markets in a developing economy," MPRA Paper 27433, University Library of Munich, Germany.
  18. Gupta, Manash Ranjan & Dutta, Priya Brata, 2010. "Skilled-unskilled wage inequality, nontraded good and endogenous supply of skilled labour: A theoretical analysis," Economic Modelling, Elsevier, Elsevier, vol. 27(5), pages 923-934, September.
  19. Shigemi Yabuuchi, 2011. "Emigration promotion and urban unemployment," Economics Bulletin, AccessEcon, vol. 31(4), pages 2816-2823.
  20. Gupta, Manash Ranjan & Dutta, Priya Brata, 2012. "Skilled–unskilled wage inequality, product variety, public input and increasing returns: A static general equilibrium analysis," Economic Modelling, Elsevier, Elsevier, vol. 29(2), pages 502-513.
  21. Li, Xiaochun & Xu, Yuanting & Wang, Dianshuang, 2014. "Environment and labor movement of skilled labor and unskilled labor between sectors," Economic Modelling, Elsevier, Elsevier, vol. 38(C), pages 367-371.

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