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Ginis in General Equilibrium: Trade, Technology and Southern Inequality

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  • Susan Chun Zhu
  • Daniel Trefler

Abstract

Within developing and newly industrialized countries, rising wage inequality is both common and highly correlated with export growth. This is incompatible with the Stolper-Samuelson theorem, but suggestive of a role for technological catch-up. We develop this insight using a model that features both Ricardian and endowments-based comparative advantage. In this model Southern catch-up induces a correlation between rising inequality and export growth. It also induces a shift in trade patterns that results in skill upgrading and rising inequality in both the South and the North. A rudimentary empirical exercise reveals that, as predicted, Southern skill upgrading is correlated with the trade-weighted average rate of Southern catch-up.

Suggested Citation

  • Susan Chun Zhu & Daniel Trefler, 2001. "Ginis in General Equilibrium: Trade, Technology and Southern Inequality," NBER Working Papers 8446, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8446
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    Cited by:

    1. Josh Hall, 2009. "Within and Across Country Inequality in a Model of Trade and Endogenous Growth," DEGIT Conference Papers c014_045, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. Angus Deaton, 2004. "Health in an age of globalization," Working Papers 172, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    3. Robbins, Donald J., 2003. "The impact of trade liberalization upon inequality in developing countries : a review of theory and evidence," ILO Working Papers 993650553402676, International Labour Organization.
    4. Bin Xu & Wei Li, 2008. "Trade, technology, and China's rising skill demand," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 16(1), pages 59-84, January.
    5. Thierry Verdier, 2005. "Intégration commerciale « socialement responsable » : une approche en termes d'économie politique," Revue d’économie du développement, De Boeck Université, vol. 13(4), pages 55-121.
    6. Joshua D Hall, 2017. "Educational Quality Matters for Development: A Model of Trade, Inequality, and Endogenous Growth," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(1), pages 128-154, January.
    7. Strauss-Kahn, Vanessa, 2005. "Firms' location decision across asymmetric countries and employment inequality," European Economic Review, Elsevier, vol. 49(2), pages 299-320, February.
    8. Caroline DAYMON, 2012. "Ouverture Commerciale, Inégalités De Revenu Et Répartition Salariale Dans Les Pays Du Sud Et De L’Est De La Méditerranée," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 81-98.
    9. Sebastián Claro, 2003. "Tariffs, Technology and Global Integration," Documentos de Trabajo 240, Instituto de Economia. Pontificia Universidad Católica de Chile..
    10. Xu, Bin, 2003. "Trade liberalization, wage inequality, and endogenously determined nontraded goods," Journal of International Economics, Elsevier, vol. 60(2), pages 417-431, August.
    11. Nasfi Fkili Wahiba, 2013. "Trade Openness and Inequality," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(6), pages 1-5, December.
    12. repec:ilo:ilowps:365055 is not listed on IDEAS
    13. Vellutini, Charles, 2003. "Capital mobility and underdevelopment traps," Journal of Development Economics, Elsevier, vol. 71(2), pages 435-462, August.

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    JEL classification:

    • F1 - International Economics - - Trade

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