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Explaining the wage gap: Heckscher-Ohlin, economic geography and services availability

Author

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  • Peeters, J.
  • Vaal, A. de

    (Groningen University)

Abstract

In the debate on globalisation and wage inequality Heckscher-Ohlin, economic geography and services availability theory has featured prominently. However, a neglected mechanism by which globalisation affects labour market outcomes is through the in-creased tradability of producer services. By integrating elements of Heck-scher- Ohlin theory, the economic geography literature and the literature on producer services linkages, we show that the impact of globalisation on the relative wages is a sophisticated combination of the effects that play a key-role in these models. The most important result we find is that the fall in transportation costs of producer services might indeed have caused the sharp increase in wage inequality. (JEL F1, R1)

Suggested Citation

  • Peeters, J. & Vaal, A. de, 2000. "Explaining the wage gap: Heckscher-Ohlin, economic geography and services availability," Research Report 00C21, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
  • Handle: RePEc:gro:rugsom:00c21
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    File URL: http://irs.ub.rug.nl/ppn/240533631
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    References listed on IDEAS

    as
    1. J.E. Haskel & M.J. Slaughter, 1998. "Does the Sector Bias of Skill-Biased Technical Change Explain Changing Wage Inequality?," Working Papers 386, Queen Mary University of London, School of Economics and Finance.
    2. Eli Berman & John Bound & Zvi Griliches, 1994. "Changes in the Demand for Skilled Labor within U. S. Manufacturing: Evidence from the Annual Survey of Manufactures," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 367-397.
    3. George J. Borjas & Valerie A. Ramey, 1993. "Foreign Competition, Market Power and Wage Inequality: Theory and Evidence," NBER Working Papers 4556, National Bureau of Economic Research, Inc.
    4. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 88(1), pages 98-116.
    5. repec:ilo:ilowps:338944 is not listed on IDEAS
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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