Globalization, Wage Inequality and Unemployment

Cheng-Te Lee (), Chung-Jen Wu and Yi-Chen Li
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Cheng-Te Lee: Department of International Trade, Chinese Culture University, Taiwan
Chung-Jen Wu: Department of International Business, China Institute of Technology, Taiwan
Yi-Chen Li: Department of International Trade, Chinese Culture University, Taiwan

Journal of Economics and Management, 2010, vol. 6, issue 1, 1-15

Abstract: Using the assumption that the vertical multinationals ship capital and intermediate goods from parent in Taiwan to subsidiaries in less-developed countries, this paper extends the Harris-Todaro model to analyze the impacts of globalization on wage inequality and unemployment. We find that an increase in the flows of capital from the parent country to the host country decreases the wage inequality of the parent country. In addition, we prove that an increase in the flows of capital discourages the urban unemployment of the parent and host countries.

Keywords: wage inequality; vertical multinationals; unemployment (search for similar items in EconPapers)
JEL-codes: E24 F21 F23 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:jec:journl:v:6:y:2010:i:1:p:1-15

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