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Price-Channel Effects of North-South Trade on the Direction of Technological Knowledge and Wage Inequality

Author

Listed:
  • Óscar Afonso

    (CEMPRE, Faculdade de Economia do Porto)

  • Álvaro Aguiar

    (CEMPRE, Faculdade de Economia do Porto)

Abstract

This paper develops a general equilibrium endogenous growth model that emphasizes the mechanisms, other than market size, through which trade-induced North-South technological knowledge diffusion influences the direction of technological progress and, thus, the path of intra and inter-country wage inequality. In contrast with the market-size effect, more common in previous literature on skill-biased technological change, the operation of the price channel, central to this paper, predicts an increasing high-skilled technological bias following openness, which is more in line with the recent trends observed in developed and developing countries.

Suggested Citation

  • Óscar Afonso & Álvaro Aguiar, 2005. "Price-Channel Effects of North-South Trade on the Direction of Technological Knowledge and Wage Inequality," FEP Working Papers 170, Universidade do Porto, Faculdade de Economia do Porto.
    • Handle: RePEc:por:fepwps:170
    as

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    File URL: http://www.fep.up.pt/investigacao/workingpapers/05.03.22_WP170_oscar.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    North-South trade; Technological knowledge diffusion; Direction of technological progress; Wage inequality.;
    All these keywords.

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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