Multinational production and the skill premium

Yang Shen and Myunghwan Yoo

Economics Letters, 2022, vol. 220, issue C

Abstract: We develop a quantitative general equilibrium model to examine the impact of multinational production on the within-country wage gap between skilled and unskilled workers. The model predictions are consistent with salient features of multinational firms in the data. Counterfactuals of a two-country analysis show that, when enabling multinational production, aggregate welfare increases in both countries while the wage gap widens in the developed country and shrinks in the less-developed country.

Keywords: Multinational production; Skill premium; Vertical FDI; Wage inequality (search for similar items in EconPapers)
JEL-codes: F21 F23 F66 J31 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003251

DOI: 10.1016/j.econlet.2022.110851

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