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The Theory of Interindustry Wage Differentials: An Intertemporal Analysis


  • Hamid Beladi
  • Nadeem Naqvi


The authors develop an "intertemporal," two-period, two-sector, specific factor model, characterized by generalized wage differentials, and show that a number of pathological results in the domestic distortions literature are all but eliminated. In this model, in contrast to the standard two-sector model, savings and investment are endogeneously determined, and trade is not always balanced. They also obtain results pertaining to the implications of wage differentials for the pattern and volume of investment, and the balance-of-trade in the current account.

Suggested Citation

  • Hamid Beladi & Nadeem Naqvi, 1987. "The Theory of Interindustry Wage Differentials: An Intertemporal Analysis," Canadian Journal of Economics, Canadian Economics Association, vol. 20(2), pages 245-256, May.
  • Handle: RePEc:cje:issued:v:20:y:1987:i:2:p:245-56

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    Cited by:

    1. Wang, Xiaolu & Kalirajan, K. P., 2002. "On explaining China's rural sectors' productivity growth," Economic Modelling, Elsevier, vol. 19(2), pages 261-275, March.
    2. Takao FUKUCHI, 1998. "A Simulation Analysis Of The Urban Informal Sector," The Developing Economies, Institute of Developing Economies, vol. 36(3), pages 225-256, September.

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