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Paths of Development and Wage VariationsPaths of Development and Wage Variations

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  • Kozo Kiyota

    (Yokohama National University and University of Michigan)

Abstract

In analyzing the relationship between factor endowments and sectoral percapita output (the path of development), Schott (2003) showed empirically that the number of cones was neither one nor three but two, and that all countries fall into one of these two cones. This is a puzzle because it is inconsistent with large wage variations across economies. This paper attempts to solve this puzzle, introducing complete and incomplete specialization into a multiplecone model. Empirical results reveal that factor endowments can explain Heckscher-Ohlin specialization and the wage variations across economies at the same time once the multiple-cone model allows the complete specialization.

Suggested Citation

  • Kozo Kiyota, 2007. "Paths of Development and Wage VariationsPaths of Development and Wage Variations," Working Papers 572, Research Seminar in International Economics, University of Michigan, revised Nov 2008.
  • Handle: RePEc:mie:wpaper:572
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    File URL: http://www.fordschool.umich.edu/rsie/workingpapers/Papers551-575/r572.pdf
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    References listed on IDEAS

    as
    1. Drusilla K. Brown & Alan V. Deardorff & Robert M. Stern, 2009. "The Effects of Multinational Production on Wages and Working Conditions in Developing Countries," World Scientific Book Chapters,in: Globalization And International Trade Policies, chapter 17, pages 623-687 World Scientific Publishing Co. Pte. Ltd..
    2. Drusilla K. Brown, 2000. "International Trade and Core Labour Standards: A Survey of the Recent Literature," OECD Labour Market and Social Policy Occasional Papers 43, OECD Publishing.
    3. Gindling, T.H. & Terrell, Katherine, 2005. "The effect of minimum wages on actual wages in formal and informal sectors in Costa Rica," World Development, Elsevier, vol. 33(11), pages 1905-1921, November.
    4. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    5. Martín Rama, 2001. "The Consequences of Doubling the Minimum Wage: The Case of Indonesia," ILR Review, Cornell University, ILR School, vol. 54(4), pages 864-881, July.
    6. Brown, Charles, 1999. "Minimum wages, employment, and the distribution of income," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 32, pages 2101-2163 Elsevier.
    7. Drusilla K. Brown, 2000. "International Trade and Core Labour Standards: A Survey of the Recent Literature," OECD Labour Market and Social Policy Occasional Papers 43, OECD Publishing.
    8. Carmen Pagés-Serra & James J. Heckman, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," Research Department Publications 4227, Inter-American Development Bank, Research Department.
    9. Carmen Pagés-Serra, 2000. "The Cost of Job Security Regulation: Evidence from Latin American Labor Markets," ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, ECONOMIA JOURNAL OF THE LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION, vol. 0(Fall 2000), pages 109-154, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Paths of Development; Complete Specialization; Multiple Cones; Factor Price Equalization; Intra-industry Heterogeneity; Wage Variations; Japan;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F2 - International Economics - - International Factor Movements and International Business
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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