Import Variety and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico
AbstractIt can be theoretically shown that imports of new foreign varieties--an increase in the extensive margin of imports--can be a possible channel for increased skill premium in wages. No past studies, however, have quantified how much of the increase in skill premium can be accounted for by the increase in the extensive margin. This paper formulates a static applied general equilibrium model and then calibrates it to the Mexican input-output matrix for 1987. In the calibrated model, our numerical experiments show that the extensive margin growth in Mexican manufactured imports from the U.S. can account for up to approximately 15 percent of the actual increase in skill premium in Mexico from 1987 to 1994. It indicates that the increase in import variety reinforced the increase in Mexican skill premium that was caused by the Mexican export side.
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Bibliographic InfoPaper provided by Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba in its series Tsukuba Economics Working Papers with number 2009-006.
Date of creation: Mar 2009
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- NEP-ALL-2009-09-26 (All new papers)
- NEP-CMP-2009-09-26 (Computational Economics)
- NEP-DEV-2009-09-26 (Development)
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- Yoshinori Kurokawa, 2009.
"Variety-Skill Complementarity: A Simple Resolution of the Trade-Wage Inequality Anomaly,"
Tsukuba Economics Working Papers
2009-007, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
- Yoshinori Kurokawa, 2011. "Variety-skill complementarity: a simple resolution of the trade-wage inequality anomaly," Economic Theory, Springer, vol. 46(2), pages 297-325, February.
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