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Price-Channel Effects of North-South Trade on the Direction of Technological Knowledge and Wage Inequality

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Author Info
Óscar Afonso () (CEMPRE, Faculdade de Economia do Porto)
Álvaro Aguiar () (CEMPRE, Faculdade de Economia do Porto)

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Abstract

This paper develops a general equilibrium endogenous growth model that emphasizes the mechanisms, other than market size, through which trade-induced North-South technological knowledge diffusion influences the direction of technological progress and, thus, the path of intra and inter-country wage inequality. In contrast with the market-size effect, more common in previous literature on skill-biased technological change, the operation of the price channel, central to this paper, predicts an increasing high-skilled technological bias following openness, which is more in line with the recent trends observed in developed and developing countries.

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Publisher Info
Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number 170.

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Length: 36 pages.
Date of creation: Mar 2005
Date of revision:
Handle: RePEc:por:fepwps:170

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Related research
Keywords: North-South trade; Technological knowledge diffusion; Direction of technological progress; Wage inequality.;

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Find related papers by JEL classification:
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

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