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Trade, services, and wage inequality

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Author Info
Philippe Askenazy

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Abstract

We develop a simple endogenous growth model with two countries, North that innovates, and South. As in Dinopoulos and Segerstrom (1999), trade liberalization raises wage inequality through stimulating R&D activity. However, the consequences of North-South trade become ambiguous when a service sector protected against international competition is included in the model. The key result is that, if the weight of service in final consumption is large enough, then trade could result in a reduction of wage inequality. Copyright 2005, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/oep/gpi026
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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 57 (2005)
Issue (Month): 4 (October)
Pages: 674-692
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Handle: RePEc:oup:oxecpp:v:57:y:2005:i:4:p:674-692

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This page was last updated on 2009-12-15.

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