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Privatization and wage inequality in developing countries

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  • Pi, Jiancai
  • Zhang, Pengqing

Abstract

This paper studies how partial privatization influences the skilled-unskilled wage inequality in developing countries through the general equilibrium approach. When the degree of product differentiation between the public sector and the private sector is small enough, an increase in the degree of partial privatization will raise both the skilled wage rate and the status quo unskilled wage rate, and the wage inequality will be narrowed down (resp. expanded) if the substitution elasticity of the rural sector is sufficiently small (resp. large). Compared with the existing literature, this paper provides a new perspective and obtains some new results.

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  • Pi, Jiancai & Zhang, Pengqing, 2018. "Privatization and wage inequality in developing countries," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 594-603.
    • Handle: RePEc:eee:reveco:v:58:y:2018:i:c:p:594-603
    DOI: 10.1016/j.iref.2018.06.005
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    Cited by:

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    3. Jiancai Pi & Yanwei Fan, 2022. "Financial frictions and wage inequality," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1064-1074, January.
    4. Leonard F. S. Wang & Ji Sun, 2023. "Corporate profit tax, firm entry with unemployment, and income inequality," Bulletin of Economic Research, Wiley Blackwell, vol. 75(2), pages 380-392, April.
    5. Pi Jiancai & Zhao Runzhi, 2020. "Corporate Social Responsibility and Wage Inequality," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-16, July.
    6. Sadeghi Amroabadi, Behrouz, 2022. "Analyzing the Asymmetric Cumulative Effects of Rentier State on Income Inequality in Mena Countries," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 9(3), pages 113-146, December.
    7. Pi, Jiancai & Fan, Yanwei, 2021. "Institutional change and wage inequality," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 440-452.
    8. Doan, Tinh & Ha, Van & Tran, Tuyen & Yang, Judy, 2023. "Dynamics of wage inequality over the prolonged economic transformation: The case of Vietnam," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 816-834.

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    More about this item

    Keywords

    Privatization; Wage inequality; Differentiated duopoly; General equilibrium approach; J31; L13; L33;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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