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Trade and Labor Market Integration with Heterogeneous Labor

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Abstract

This paper explores the impact of labor market integration between an advanced country (North) and backward country (South) on income distribution and pattern oftrade by making use of a two-sector, competitive trade model with heterogeneous labor. We prove that, for the North, after the labor market integration, none of the workers is worse off; instead some people earn higher wages than before. And, for the South, some workers are worse off. In addition, we find that the pattern of trade for the integrated economy might reverse.

Suggested Citation

  • Cheng-Te Lee & Deng-Shing Huang, 2009. "Trade and Labor Market Integration with Heterogeneous Labor," IEAS Working Paper : academic research 09-A004, Institute of Economics, Academia Sinica, Taipei, Taiwan.
    • Handle: RePEc:sin:wpaper:09-a004
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    File URL: https://www.econ.sinica.edu.tw/~econ/pdfPaper/09-A004.pdf
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    Keywords

    diversity; labor market integration; pattern of trade; income distribution;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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