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Trade, Wage Gaps, and Specific Human Capital Accumulation

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Author Info
Van Long, Ngo
Riezman, Raymond
Soubeyran, Antoine

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Abstract

We develop a new framework for the analysis of the impact of trade liberalization on the wage structure. Our model focuses on the decision of workers to accumulate firm-specific skills, by "on-the-job" training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 911.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_911

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Related research
Keywords: wage gap; human capital; trade liberalization;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Long, N.V. & Wong, K.Y., 1996. "Endogenous Growth and International Trade: A Survey," Discussion Papers in Economics at the University of Washington 96-07, Department of Economics at the University of Washington.
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  2. Donald R. Davis, 1996. "Does European Unemployment Prop Up American Wages?," Harvard Institute of Economic Research Working Papers 1752, Harvard - Institute of Economic Research.
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  3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
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Cited by:
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  1. Willmann, Gerald & Blanchard, Emily, 2007. "Political Stasis or Protectionist Rut? Policy Mechanisms for Trade Reform in a Democracy," Economics Working Papers 2007,21, Christian-Albrechts-University of Kiel, Department of Economics. [Downloadable!]
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  2. Viet Do & Ngo Van Long, 2007. "International Outsourcing under Monopolistic Competition: Winners and Losers," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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