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Fragmentation and Wage Inequality: Insights from a Simple Model

Author

Listed:
  • Juan Carluccio

    (Centre de recherche de la Banque de France - Banque de France)

  • Ivar Ekeland

    (CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique)

  • Roger Guesnerie

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CdF (institution) - Collège de France)

Abstract

We develop a simple model to study how globalization affects wage inequalities. The model features three goods, one is an "international" good, and two are local non-tradable goods. The non-tradable goods are produced by local labor, either skilled or unskilled, while labor of all types and all origins contribute to the production of the international good. We find that increasing participation of the South in global production and consumption lead to an increase in wage inequalities in the North. Higher South integration into global value chains reduces North-South wage inequalities.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Juan Carluccio & Ivar Ekeland & Roger Guesnerie, 2017. "Fragmentation and Wage Inequality: Insights from a Simple Model," PSE-Ecole d'économie de Paris (Postprint) hal-01631059, HAL.
    • Handle: RePEc:hal:pseptp:hal-01631059
    DOI: 10.15609/annaeconstat2009.125-126.0113
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    JEL classification:

    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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