Elastic labor supply, variable markups, and spatial inequalities

Hajime Takatsuka and Dao-Zhi Zeng ()

Review of International Economics, 2018, vol. 26, issue 5, 1084-1100

Abstract: Assuming an inelastic labor supply, existing studies show that a larger country has a higher wage rate and a higher individual income. We reexamine these results using a model with an endogenous labor supply and variable markups. We find that these results can be reversed. Specifically, in the larger country, the wage rate is lower but the individual income is higher if the love for variety is strong and trade costs are high. In contrast, the wage rate is higher but the individual income may be lower if the love for variety is weak and trade costs are low.

Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/roie.12350

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:reviec:v:26:y:2018:i:5:p:1084-1100

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0965-7576

Access Statistics for this article

Review of International Economics is currently edited by E. Kwan Choi

More articles in Review of International Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().