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Trade and market integration with heterogeneous labor

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  • Cheng-Te Lee
  • Deng-Shing Huang

Abstract

This paper explores the impact of labor market integration between an advanced country (North) and backward country (South) on income distribution and pattern of trade (POT) by making use of a two-sector, competitive trade model with heterogeneous labor. We prove that, for the North, the labor market integration increases income inequality. And, for the South, the integration decreases income inequality. In addition, we find that the POT for the integrated economy might reverse.

Suggested Citation

  • Cheng-Te Lee & Deng-Shing Huang, 2015. "Trade and market integration with heterogeneous labor," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 22(4), pages 428-448, December.
    • Handle: RePEc:taf:raaexx:v:22:y:2015:i:4:p:428-448
    DOI: 10.1080/16081625.2015.1012088
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    References listed on IDEAS

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    1. Giovanni Maggi & Gene M. Grossman, 2000. "Diversity and Trade," American Economic Review, American Economic Association, vol. 90(5), pages 1255-1275, December.
    2. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    3. Jason Beckfield, 2006. "European Integration and Income Inequality," LIS Working papers 447, LIS Cross-National Data Center in Luxembourg.
    4. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 557-586.
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    Cited by:

    1. Cheng‐Te Lee & Shang‐Fen Wu, 2023. "Technology advantage, terms of trade, and pattern of trade," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 166-174, March.

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