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Trade and the distribution of human capital

In: International Trade Agreements and Political Economy

Listed author(s):
  • Spiros Bougheas

    (School of Economics, University Park, University of Nottingham, NG7 2RD, Nottingham, UK)

  • Raymond Riezman

    (Department of Economics, W360, PBAB, University of Iowa, Iowa City, Iowa 52242, USA)

AbstractWe develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of the two human capital distributions. We also show that the two distributions of endowments also completely determine the effects of trade on income inequality. We also look at a simple majority voting model. It turns out autarky and free trade with and without compensation may be the voting outcome.

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File URL: http://www.worldscientific.com/doi/pdf/10.1142/9789814390125_0020
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File URL: http://www.worldscientific.com/doi/abs/10.1142/9789814390125_0020
Download Restriction: Ebook Access is available upon purchase.

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This chapter was published in:
  • Raymond Riezman (ed.), 2013. "International Trade Agreements and Political Economy," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 8386, June.
  • This item is provided by World Scientific Publishing Co. Pte. Ltd. in its series World Scientific Book Chapters with number 9789814390125_0020.
    Handle: RePEc:wsi:wschap:9789814390125_0020
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    12. Davidson, Carl & Matusz, Steven J. & Nelson, Douglas R., 2007. "Can compensation save free trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 167-186, March.
    13. Deardorff, A.V., 1997. "International Externalities in the Use of Domestic Policies to Redistribute Income," Working Papers 405, Research Seminar in International Economics, University of Michigan.
    14. Gene M. Grossman, 2004. "The Distribution of Talent and the Pattern and Consequences of International Trade," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 209-239, February.
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