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The Tendency towards Factor Price Equalization among OECD Countries

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  • Mokhtari, Manouchehr
  • Rassekh, Farhad

Abstract

The authors conduct tests to gain insight into the empirical relevance of the proposition that factor prices converge as trade expands. The test results support the proposition of factor price convergence in sixteen OECD countries during the 1961-84 period. Regression analyses support the view that trade openness has been the most significant factor influencing wage variations. This paper also distinguishes between "high wage" and "low wage" countries. Pooled ordinary least squares estimates indicate that Canada, the United States, Denmark, West Germany, the Netherlands, and Sweden are "high wage" and Japan, New Zealand, Austria, Belgium, Finland, France, Ireland, Norway, Switzerland, and the United Kingdom are "low wage" countries. Further results using the Within estimations technique are provided. Copyright 1989 by MIT Press.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics & Statistics.

Volume (Year): 71 (1989)
Issue (Month): 4 (November)
Pages: 636-42

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Handle: RePEc:tpr:restat:v:71:y:1989:i:4:p:636-42

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Web page: http://mitpress.mit.edu/journals/

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Cited by:
  1. Joanna Alexopoulos & Tiago V. Cavalcanti, 2010. "Cheap home goods and persistent inequality," Economic Theory, Springer, vol. 45(3), pages 417-451, December.
  2. Georgios Fotopoulos, 2005. "Twin - Peaks in E.U. Regional Productivity Dynamics: a nonparametric analysis," Papers on Entrepreneurship, Growth and Public Policy 2005-28, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  3. Hyeongwoo Kim & Henry Thompson, 2012. "Wages in a Factor Proportions Model with Energy Input," Auburn Economics Working Paper Series auwp2012-05, Department of Economics, Auburn University.
  4. Bruce Elmslie & William Milberg, 1992. "International trade and factor intensity uniformity: An empirical assessment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 128(3), pages 464-486, September.
  5. Todd Burgman & John Geppert, 1993. "Factor price equalization: a cointegration approach," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(3), pages 472-487, September.
  6. Steven Globerman & W. Ron SIngleton, 2004. "Harmonization Of Voluntary Disclosure Practices By Japanese Companies," International Trade 0406002, EconWPA.
  7. Kim, Hyeongwoo & Thompson, Henry, 2009. "Factor Proportions Wages in a Structural Vector Autoregression," MPRA Paper 17798, University Library of Munich, Germany.
  8. Farhad Rassekh, 1993. "International trade and the relative dispersion of industrial wages and production techniques in 14 OECD countries, 1970–1985," Open Economies Review, Springer, vol. 4(3), pages 325-344, September.
  9. Slaughter, Matthew J., 2001. "Trade liberalization and per capita income convergence: a difference-in-differences analysis," Journal of International Economics, Elsevier, vol. 55(1), pages 203-228, October.
  10. Rassekh, Farhad, 2010. "Is Stolper-Samuelson dangerous and FPE a failure?," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 555-561, October.

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