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Foreign Direct Investment, Non-traded Goods and Real Wages

Using a three-sector general equilibrium model with non-traded goods, we investigate the impact of foreign direct investment on the real wages of skilled and unskilled workers. We show that foreign direct investment increases the real wages of skilled and unskilled workers, but widens the gap between the two under plausible conditions.

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Paper provided by Utah State University, Department of Economics and Finance in its series Working Papers with number 200804.

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Length: 7 pages
Date of creation: 23 Dec 2008
Date of revision:
Publication status: Forthcoming in Pacific Economic Review.
Handle: RePEc:uth:wpaper:200804
Contact details of provider: Postal: 3565 Old Main Hill, Logan, UT 84322-3565
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  1. Paul Krugman & Robert Lawrence, 1993. "Trade, Jobs, and Wages," NBER Working Papers 4478, National Bureau of Economic Research, Inc.
  2. repec:tpr:qjecon:v:107:y:1992:i:1:p:35-78 is not listed on IDEAS
  3. Hamid Beladi & Ravi Batra, 2004. "Traded and Nontraded Goods and Real Wages," Review of Development Economics, Wiley Blackwell, vol. 8(1), pages 1-14, 02.
  4. Das, Satya P., 2002. "Foreign direct investment and the relative wage in a developing economy," Journal of Development Economics, Elsevier, vol. 67(1), pages 55-77, February.
  5. Batra, Raveendra N, 1973. "Nontraded Goods, Factor Market Distortions, and the Gains from Trade," American Economic Review, American Economic Association, vol. 63(4), pages 706-13, September.
  6. Katz, L.F. & Murphy, K.M., 1991. "Changes in Relative Wages, 1963-1987: Supply and Demand Factors," Harvard Institute of Economic Research Working Papers 1580, Harvard - Institute of Economic Research.
  7. Edward E. Leamer, 1996. "In Search of Stolper-Samuelson Effects on U.S. Wages," NBER Working Papers 5427, National Bureau of Economic Research, Inc.
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