Economic Development, Trade and Wages

Ronald Jones and Sugata Marjit

German Economic Review, 2003, vol. 4, issue 1, 1-17

Abstract: We present models that allow the use of unskilled and skilled labor as well as capital and land. Thus agriculture, important in developing countries, can be included as well as two types of labor and a single (or two) type(s) of physical capital. The models are related to the simple 3x2 specific factors structure by means of what is called the linear neighborhood structure, wherein no activity uses more than two factors, and the two types of labor work in separated sectors, using in common a type of physical capital. We discuss how wage rate changes are related when endowments change, when agriculture becomes traded and prices rise, and when unskilled labor becomes educated and joins the ranks of skilled workers.

Keywords: Linear neighborhood structure; ripple effects; hinterland (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1111/1468-0475.t01-1-00070

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