Trade, Wage Gaps, and Specific Human Capital Accumulation

Ngo Van Long, Raymond G. Riezman and Antoine Soubeyran ()

No CESifo Working Paper No. 911, CESifo Working Paper Series from CESifo Group Munich

Abstract: We develop a new framework for the analysis of the impact of trade liberalization on the wage structure. Our model focuses on the decision of workers to accumulate firm-specific skills, by "on-the-job" training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.

Keywords: wage gap; human capital; trade liberalization (search for similar items in EconPapers)
JEL-codes: F10 F16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dev and nep-lab
Date: 2003
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Journal Article: Trade, Wage Gaps, and Specific Human Capital Accumulation (2007)
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