International Trade and Income Distribution

Xiaokai Yang and Dingsheng Zhang

Working Papers from Chicago - Graduate School of Business

Abstract: This paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity, and inequality of income distribution. The model with transaction costs and exogenous and endogenous comparative advantages shows that as transaction conditions are improved, the general equilibrium discontinuously jumps from autarky to partial division of labor with a dual structure, then to the complete division of labor where dual structure disappears. In this process different groups of individuals with different transaction conditions get involved in a certain level of division of labor at different stages of development.

Keywords: INCOME DISTRIBUTION; ECONOMIC DEVELOPMENT (search for similar items in EconPapers)
JEL-codes: D30 F10 O10 (search for similar items in EconPapers)
Date: 2000

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Working Paper: International Trade and Income Distribution (1999)
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