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Chapter 12 Foreign Capital and Skilled–Unskilled Wage Inequality in a Developing Economy with Non-Traded Goods

In: Contemporary and Emerging Issues in Trade Theory and Policy

Author

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  • Sarbajit Chaudhuri
  • Shigemi Yabuuchi

Abstract

The existing theoretical literature does not adequately take into consideration the existence of non-traded goods and the nature of capital mobility between the traded and the non-traded sectors in analyzing the consequences of liberalized investment policies on the relative wage inequality in the developing countries. The present chapter purports to fill in this gap by using two four-sector general equilibrium models reasonable for a developing economy. We have examined the outcome of foreign capital inflows on wage inequality when non-traded goods are intermediate inputs and final goods. Appropriate policy recommendations for improving the wage inequality have also been made.

Suggested Citation

  • Sarbajit Chaudhuri & Shigemi Yabuuchi, 2008. "Chapter 12 Foreign Capital and Skilled–Unskilled Wage Inequality in a Developing Economy with Non-Traded Goods," Frontiers of Economics and Globalization, in: Contemporary and Emerging Issues in Trade Theory and Policy, pages 225-250, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:fegzzz:s1574-8715(08)04012-8
    DOI: 10.1016/S1574-8715(08)04012-8
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