Market Integration, Wage Concentration, and the Cost and Volume of Traded Machines

Terence Edwards and Carlo Perroni

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: We investigate the theoretical relationship between wage concentration and international market integration. Access to imported varieties lowers the cost of intermediate inputs (“machines”) used to carry out production tasks, causing workers with different comparative abilities to be sorted across a narrower range of tasks and raising the concentration of earnings. The accompanying shift in input use further expands the range of traded varieties, which further lowers the cost of machines. Effects on the volume of intermediate goods trade and the number of varieties produced are mutually reinforcing, resulting in a multiplier effect of market integration on wage concentration.

Keywords: Trade, Skills, and Tasks; Wage Inequality (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-lab and nep-lma
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Market Integration, Wage Concentration, and the Cost and Volume of Traded Machines (2014)
Working Paper: Market Integration, Wage Concentration, and the Cost and Volume of Traded Machines (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:cge:wacage:203

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