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Market Interconnection and Wages


  • Hamid Beladi

    (The University of Texas at San Antonio)

  • Reza Oladi

    (Utah State Universty)


We study the impacts of terms trade changes on absolute and the real wages of skilled and unskilled labor and their gaps for an economy specialized in export production. We show an interesting result where wage behavior as well as the skilled-unskilled wage gap depend on elasticity of import demand, unlike in 3x2 classical-neoclassical speci c-factor model of trade. Although, our analysis is in the spirit of Stolper-Samuelson theorem, given the structure of our model, factor intensity plays no role in our results as in the speci c-factor model.

Suggested Citation

  • Hamid Beladi & Reza Oladi, "undated". "Market Interconnection and Wages," Working Papers 0062, College of Business, University of Texas at San Antonio.
  • Handle: RePEc:tsa:wpaper:0062

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    References listed on IDEAS

    1. Deardorff, Alan V., 2005. "A trade theorist's take on skilled-labor outsourcing," International Review of Economics & Finance, Elsevier, vol. 14(3), pages 259-271.
    2. Hamid Beladi & Ravi Batra, 2004. "Traded and Nontraded Goods and Real Wages," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 1-14, February.
    3. Jones, Ronald W., 2008. "Key international trade theorems and large shocks," International Review of Economics & Finance, Elsevier, vol. 17(1), pages 103-112.
    4. Jones, Ronald W., 1996. "International trade, real wages, and technical progress: The specific-factors model," International Review of Economics & Finance, Elsevier, vol. 5(2), pages 113-124.
    5. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
    6. Jones, Ronald W, 1974. "Trade with Non-traded Goods: The Anatomy of Inter-connected Markets," Economica, London School of Economics and Political Science, vol. 41(162), pages 121-138, May.
    7. Reza Oladi & Hamid Beladi, 2008. "Non-traded Goods, Technical Progress and Wages," Open Economies Review, Springer, vol. 19(4), pages 507-515, September.
    8. Chaudhuri, Sarbajit & Yabuuchi, Shigemi, 2007. "Economic liberalization and wage inequality in the presence of labour market imperfection," International Review of Economics & Finance, Elsevier, vol. 16(4), pages 592-603.
    9. Batra, Ravi, 1992. "The Fallacy of Free Trade," Review of International Economics, Wiley Blackwell, vol. 1(1), pages 19-31, November.
    10. Jones, Ronald W & Engerman, Stanley L, 1996. "Trade, Technology, and Wages: A Tale of Two Countries," American Economic Review, American Economic Association, vol. 86(2), pages 35-40, May.
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    Cited by:

    1. Mukherjee, Soumyatanu, 2016. "Technology, trade and ‘urban poor’ in a general equilibrium model with segmented domestic factor markets," International Review of Economics & Finance, Elsevier, vol. 45(C), pages 400-416.
    2. Beladi, Hamid & Oladi, Reza, 2011. "An elementary proposition on technical progress and non-traded goods," Journal of Mathematical Economics, Elsevier, vol. 47(1), pages 68-71, January.

    More about this item


    skilled-unskilled labor; wage gap; terms of trade;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions


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