International Factor Mobility, Production Cost Components, and Wage Inequality

Jiancai Pi and Zhou Yu ()
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Zhou Yu: Department of Economics, Nanjing University, 22 Hankou Road, Nanjing 210093, P. R. China

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 2, 503-522

Abstract: The present paper establishes a two-sector monopolistic competition model to investigate how international factor mobility influences the skilled–unskilled wage inequality when the monopolistically competitive sector producing final goods is characterized by various types of production cost functions. We discuss three types of production cost functions of the monopolistically competitive sector. Different types of production cost functions have different production factor components of variable and fixed costs. We find that differences in production cost components of the monopolistically competitive sector matter for the impacts of international factor mobility on the skilled–unskilled wage inequality.

Keywords: international factor mobility; production cost components; skilled–unskilled wage inequality; monopolistic competition (search for similar items in EconPapers)
JEL-codes: J31 L13 R34 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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DOI: 10.1515/bejeap-2014-0006

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