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Foreign capital, public infrastructure, and wage inequality in developing countries

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  • Pi, Jiancai
  • Zhou, Yu
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    Abstract

    We establish four-sector general equilibrium models to investigate how an inflow of foreign capital influences the skilled–unskilled wage inequality in the presence of the endogenous public infrastructure provision. In the situation of the pure public infrastructure provision, the change of the skilled–unskilled wage inequality is determined by the comparison of the capital distributive shares in urban sectors. In the case of the semi-public infrastructure provision, the change of the skilled–unskilled wage gap is determined by the factor substitution elasticities in urban sectors. A potential extension is also given and it confirms the robustness of the obtained results.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Review of Economics & Finance.

    Volume (Year): 29 (2014)
    Issue (Month): C ()
    Pages: 195-207

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    Handle: RePEc:eee:reveco:v:29:y:2014:i:c:p:195-207

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    Web page: http://www.elsevier.com/locate/inca/620165

    Related research

    Keywords: Pure public infrastructure; Semi-public infrastructure; Foreign capital; Wage inequality;

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    Cited by:
    1. Pi, Jiancai & Zhou, Yu, 2014. "Tax competition in federations revisited," Economics Letters, Elsevier, vol. 123(1), pages 104-107.

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