Income Distribution in the Dynamic Two-Factor Trade Model
The issue of the effects of trade on personal income distribution has remained largely unexamined. This paper describes an overlapping generations 2 x 2 model with a bequest motive and heterogeneous agents in order to examine the problem. In this dynamic setting, trade leads to both short-run and long-run reductions (increases) in inequality in labor (capital)-abundant countries if the investment good is capital-intensive. If the consumption good is capital-intensive, the short-run effects continue to hold but the long-run effects are ambiguous. Copyright 1992 by The London School of Economics and Political Science.
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Volume (Year): 59 (1992)
Issue (Month): 234 (May)
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