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Product variety, finite changes and wage inequality


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


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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    13. Sugata Marjit & Hamid Beladi & Avik Chakrabarti, 2004. "Trade and Wage Inequality in Developing Countries," Economic Inquiry, Western Economic Association International, vol. 42(2), pages 295-303, April.
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    Cited by:

    1. Marjit, Sugata & Mandal, Biswajit, 2014. "Finite Change – Implication for Trade Theory, Policy and Development," MPRA Paper 68228, University Library of Munich, Germany.

    More about this item


    Product variety; Factor mobility; Finite changes; Wage inequality; Trade patterns;

    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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