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Paths of Development and Wage VariationsPaths of Development and Wage Variations


  • Kozo Kiyota

    (Yokohama National University and University of Michigan)


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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    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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