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Globalization, Wage Inequality and Unemployment


  • Cheng-Te Lee

    () (Department of International Trade, Chinese Culture University, Taiwan)

  • Chung-Jen Wu

    (Department of International Business, China Institute of Technology, Taiwan)

  • Yi-Chen Li

    (Department of International Trade, Chinese Culture University, Taiwan)


Using the assumption that the vertical multinationals ship capital and intermediate goods from parent in Taiwan to subsidiaries in less-developed countries, this paper extends the Harris-Todaro model to analyze the impacts of globalization on wage inequality and unemployment. We find that an increase in the flows of capital from the parent country to the host country decreases the wage inequality of the parent country. In addition, we prove that an increase in the flows of capital discourages the urban unemployment of the parent and host countries.

Suggested Citation

  • Cheng-Te Lee & Chung-Jen Wu & Yi-Chen Li, 2010. "Globalization, Wage Inequality and Unemployment," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 6(1), pages 1-15, January.
  • Handle: RePEc:jec:journl:v:6:y:2010:i:1:p:1-15

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    Cited by:

    1. repec:eee:jouret:v:94:y:2018:i:2:p:136-153 is not listed on IDEAS
    2. Chakraborty, Ratula & Dobson, Paul W. & Seaton, Jonathan S. & Waterson, Michael, 2015. "Pricing in inflationary times: The penny drops," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 71-86.
    3. David PejĨoch, 2014. "CADAQUES: The Methodology for Complex Data and Information Management," Acta Informatica Pragensia, University of Economics, Prague, vol. 2014(1), pages 44-56.
    4. repec:eee:rensus:v:76:y:2017:i:c:p:1440-1464 is not listed on IDEAS

    More about this item


    wage inequality; vertical multinationals; unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business


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