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Production fragmentation and factor price convergence

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  • Saygılı, Hülya

Abstract

In this analysis, we empirically analyze if the nature of trade matters for international factor price convergence. In particular, we examine whether factor prices converge when country pairs involve with more bilateral production fragmentation arrangements. We apply panel fixed effect techniques using data for five EU countries. The analyses are controlled for alternative trade related indicators such as bilateral trade intensity and bilateral intra-industry trade as well as for industrial similarity variables. We find that bilateral production fragmentation plays a key role in labor cost converging effects of trade.

Suggested Citation

  • Saygılı, Hülya, 2017. "Production fragmentation and factor price convergence," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 535-544.
  • Handle: RePEc:eee:reveco:v:51:y:2017:i:c:p:535-544
    DOI: 10.1016/j.iref.2017.07.022
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    More about this item

    Keywords

    International factor price convergence; Production fragmentation; Trade;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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