 Dynamic trade, education and intergenerational inequalityJournal of International Economics, 2024, vol. 151, issue C Abstract: I present a dynamic trade model spanning many countries to explore the transitional paths of trade-induced inequality. By incorporating capital-skill complementarity, human capital accumulation, and capital accumulation, this paper examines the exact transitional path following a shift from autarky to trade. It reveals that trade increases the skill premium, skill share, and real wages for both skilled and unskilled workers in the majority of countries at the steady state. However, the short-term impact of trade on inequality is more pronounced. The exact transitional path indicates that the dynamic of trade-induced inequality is influenced by the flexibility in adjusting factor supplies during the transition at different stages, and education alleviates approximately 50% of trade-induced inequality in the long run. Furthermore, the analysis illuminates the observed patterns of skill premium in recent trade liberalization episodes in Mexico, China, and South Korea, and raises the possibility that globalization may intensify intergenerational inequality. Keywords: Skill premium; Dynamics; Capital accumulation; Education (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:151:y:2024:i:c:s0022199624000941 DOI: 10.1016/j.jinteco.2024.103967 Access Statistics for this article Journal of International Economics is currently edited by Gourinchas, Pierre-Olivier and RodrÃguez-Clare, Andrés More articles in Journal of International Economics from Elsevier |
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