Skill distribution and income disparity in a North-South trade model
Hesham Abdel-Rahman ()
Canadian Journal of Economics, 2005, vol. 38, issue 4, 1298-1326
What are the impacts of free trade agreement on the welfare of different types of workers in a developed country? What is the impact of free trade on a developed country's income disparity? What is the effect of free trade on the skill distribution of a developed country? The objective of this paper is to address the above questions in a two-sector general-equilibrium North-South trade model in which both countries produce one final good and one high-tech intermediate input. The final good is produced with the use of a high-tech intermediate input and unskilled workers. Horizontally differentiated skilled workers produce the high-tech intermediate input. Each country is populated by a continuum of unskilled workers with differential potential ability. Workers in the North and South can acquire skills by investment in training or education. Thus, skill distribution in the North and South is determined endogenously in the model through a self-selection process. I characterize two different types of equilibria: a closed-economy equilibrium without trade and a free trade equilibrium. Then, I investigate the impact of free trade, in the presence of training costs, on the skill distribution within each country, income disparity, and social welfare.
JEL-codes: D63 F10 J31 (search for similar items in EconPapers)
References: Add references at CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
http://economics.ca/cgi/xms?jab=v38n4/10.pdf Full text (application/pdf)
Available to subscribers only. Alternative access through JSTOR and Ingenta.
Working Paper: Skill distribution and income disparity in a north-south trade model (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cje:issued:v:38:y:2005:i:4:p:1298-1326
Ordering information: This journal article can be ordered from
Access Statistics for this article
Canadian Journal of Economics is currently edited by David Green
More articles in Canadian Journal of Economics from Canadian Economics Association Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4. Contact information at EDIRC.
Bibliographic data for series maintained by Prof. Werner Antweiler ().