Trade, Wage Gaps, and Specific Human Capital Accumulation
We develop a new framework for the analysis of the impact of trade liberalization on the wage structure. Our model focuses on the decision of workers to accumulate firm-specific skills, by “on-the-job” training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.
|Date of creation:||2003|
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- Long, Ngo Van & Wong, Kar-Yiu, 1997. "Endogenous growth and international trade: A survey," Discussion Papers, Series II 337, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
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