Rising wage inequality in developing economies: Privatization and competition

Chao, Chi-Chur, Bharat R. Hazari () and Eden Yu

Journal of International Trade & Economic Development, 2006, vol. 15, issue 3, pages 375-385

Abstract: Using a dual structure depicting a developing economy, this paper shows that increased partial privatization or foreign competition can lead to wage inequality between skilled and unskilled labor. In addition, rising wage inequality can be triggered by inflows of unskilled labor or outflows of skilled labor and/or capital. Further, partial privatization or foreign competition reduces the urban output, thereby raising the goods price and unemployment ratio. These effects lower social welfare of the economy.

Keywords: Wage inequality; privatization; competition; developing economies (search for similar items in EconPapers)
Date: 2006
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