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Income Distribution, Technical Change and the Dynamics of International Economic Integration

  • Michael Landesmann


    (The Vienna Institute for International Economic Studies, wiiw)

  • Robert Stehrer


    (The Vienna Institute for International Economic Studies, wiiw)

This paper explores the features of a dynamic multisectoral model which focuses on the relationship between income distribution, growth and international specialization. The model is explored both for the steady-state properties and the transitory dynamics of integrated economies. Income inequality affects the patterns of growth and international specialization as the model uses non-linear Engel curves and hence different income groups are characterized by different expenditure patterns. At the same time income distribution is also reflected in the relative wage rates of skilled to unskilled workers, i.e. the skill premium, and hence the wage structure affects comparative costs of industries which have different skill intensities. The model is applied to a situation which analyses qualitatively different economic development strategies of catching-up economies (a 'Latin American' scenario and a 'South East Asian' scenario).

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Paper provided by The Vienna Institute for International Economic Studies, wiiw in its series wiiw Working Papers with number 31.

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Date of creation: Sep 2004
Date of revision:
Publication status: Published as wiiw Working Paper
Handle: RePEc:wii:wpaper:31
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  1. Vladimir Gligorov, 2004. "Debt Sustainability and Growth in Croatia," wiiw Research Reports 306, The Vienna Institute for International Economic Studies, wiiw.
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