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Policy Implications of the Trade and Wages Debate


  • Deardorff, A.V.


This paper examines the choice of policies to redistribute income in response to an increase in inequality caused by a rise in the differential wage paid to skilled labor compared to unskilled labor. The main issue is whether the appropriate policy response depends on the cause of the increased differential. In particular, should policies respond any differently if the rising differential is due to "trade" -shorthand for greater openness in global markets and/or greater participation in those markets by developing countries abundantly endowed with unskilled labor - or due to technological changes that have favored skilled labor over unskilled labor.

Suggested Citation

  • Deardorff, A.V., 1999. "Policy Implications of the Trade and Wages Debate," Working Papers 440, Research Seminar in International Economics, University of Michigan.
  • Handle: RePEc:mie:wpaper:440

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    References listed on IDEAS

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    9. Bekaert, Geert & Harvey, Campbell R., 2003. "Emerging markets finance," Journal of Empirical Finance, Elsevier, vol. 10(1-2), pages 3-56, February.
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    Cited by:

    1. Harris, Richard G. & Robertson, Peter E., 2013. "Trade, wages and skill accumulation in the emerging giants," Journal of International Economics, Elsevier, vol. 89(2), pages 407-421.
    2. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," MPRA Paper 83525, University Library of Munich, Germany.
    3. Kar, Saibal & Beladi, Hamid, 2004. "Skill formation and international migration: welfare perspective of developing countries," Japan and the World Economy, Elsevier, vol. 16(1), pages 35-54, January.

    More about this item



    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D30 - Microeconomics - - Distribution - - - General


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