Growth, Trade and Inequality in an Efficiency-Wage Framework
The last twenty years have seen a rise of inequalities and a slowdown of growth in the US and Europe. It is common wisdom to interpret the rise of inequalities as the result of a skill-biased labor demand shift. While there is a strong evidence that such a shift has happened, this overlooks the fact that inequality has also markedly risen between individuals with the same qualification. Moreover, endogenous growth models usually predict that this kind of labor demand shift should have been growth enhancing.
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