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Product cycles, endogenous skill acquisition, and wage inequality

Author

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  • Hitoshi Tanaka
  • Tatsuro Iwaisako

Abstract

This paper presents an endogenous product cycle overlapping generations model, where the supply of skilled labour is endogenously determined. This is used to examine how production shifts through imitation by developing countries affect the domestic wage differential and supply of skilled labour in developed countries. In the model, production shifts increase the demand for researchers in developed countries and cause higher relative wages for skilled labour: this leads to more individuals acquiring the skills. As a consequence, the model helps to explain the simultaneous increase in the domestic wage gap and in the supply of skilled labour observed in developed countries.

Suggested Citation

  • Hitoshi Tanaka & Tatsuro Iwaisako, 2009. "Product cycles, endogenous skill acquisition, and wage inequality," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 300-331, February.
    • Handle: RePEc:cje:issued:v:42:y:2009:i:1:p:300-331
    DOI: 10.1111/j.1540-5982.2008.01509.x
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    Cited by:

    1. Iwaisako, Tatsuro & Tanaka, Hitoshi, 2017. "Product cycles and growth cycles," Journal of International Economics, Elsevier, vol. 105(C), pages 22-40.
    2. Hiroaki Ohno & Kouki Sugawara, 2016. "Variety expansion, preference shocks, and financial intermediaries," Annals of Finance, Springer, vol. 12(1), pages 17-28, February.
    3. Ken-ichi Hashimoto & Ken Tabata, 2013. "Rising Longevity, Human Capital and Fertility in Overlapping Generations Version of an R&D-based Growth Model," Discussion Paper Series 104, School of Economics, Kwansei Gakuin University, revised May 2013.
    4. Anran Xiao & Zeshui Xu & Marinko Skare & Yong Qin & Xinxin Wang, 2024. "Bridging the digital divide: the impact of technological innovation on income inequality and human interactions," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-18, December.
    5. Lim, King Yoong, 2019. "Modelling the dynamics of corruption and unemployment with heterogeneous labour," Economic Modelling, Elsevier, vol. 79(C), pages 98-117.
    6. King Yoong Lim & Pengfei Jia & Ali Raza, 2018. "Crime, Human Capital, and the Impact of Different Taxation," Working Papers 220851234, Lancaster University Management School, Economics Department.
    7. repec:ocp:rpaper:rp-14/03 is not listed on IDEAS
    8. Agénor, Pierre-Richard & Canuto, Otaviano, 2017. "Access to finance, product innovation and middle-income traps," Research in Economics, Elsevier, vol. 71(2), pages 337-355.
    9. Pengfei Jia & King Yoong Lim & Ali Raza, 2020. "Crime, different taxation, police spending and embodied human capital," Manchester School, University of Manchester, vol. 88(5), pages 664-698, September.
    10. Colin R. Davis, 2009. "Interregional Knowledge Spillovers And Occupational Choice In A Model Of Free Trade And Endogenous Growth," Journal of Regional Science, Wiley Blackwell, vol. 49(5), pages 855-876, December.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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