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Product variety, finite changes and wage inequality

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  • Dutta, Meghna
  • Kar, Saibal
  • Marjit, Sugata

Abstract

This paper presents a model with product variety to examine the effects of emigration and capital mobility between the North and the South on production reorganization and two-sided wage inequality. We obtain conditions under which the production patterns in both North and South undergo ‘finite changes’. Overall, the production and trade patterns may be such that the South produces and exports a homogeneous good while the North, a commodity with varieties — the result driven not by technological changes, but by factor mobility. The results further suggest that the wage inequality rises in both countries in conformity with available empirical evidence.

Suggested Citation

  • Dutta, Meghna & Kar, Saibal & Marjit, Sugata, 2013. "Product variety, finite changes and wage inequality," Economic Modelling, Elsevier, vol. 35(C), pages 610-613.
    • Handle: RePEc:eee:ecmode:v:35:y:2013:i:c:p:610-613
    DOI: 10.1016/j.econmod.2013.08.020
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    References listed on IDEAS

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    Cited by:

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    2. Sugata Marjit & Biswajit Mandal, 2021. "Monopolistic Competition, Optimum Product Diversity, and International Trade - The Role of Factor Endowment and Factor Intensities," CESifo Working Paper Series 9256, CESifo.
    3. Jiancai Pi & Xiangyu Huang, 2021. "Product Variety and Wage Inequality," Annals of Economics and Finance, Society for AEF, vol. 22(1), pages 135-151, May.
    4. Shrimoyee Ganguly & Rajat Acharyya, 2021. "Emigration, Tax on Remittances and Export Quality," South Asian Journal of Macroeconomics and Public Finance, , vol. 10(1), pages 40-71, June.
    5. Sugata Marjit & Biswajit Mandal, 2016. "Finite Change—Implication for Trade Theory, Policy and Development," India Studies in Business and Economics, in: S. Mahendra Dev & P.G. Babu (ed.), Development in India, edition 127, chapter 0, pages 271-282, Springer.

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    More about this item

    Keywords

    Product variety; Factor mobility; Finite changes; Wage inequality; Trade patterns;
    All these keywords.

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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