A note on quantitative trade restrictions, income effects and wage inequality

Rajat Acharyya

Economic Modelling, 2011, vol. 28, issue 6, 2628-2633

Abstract: This paper examines the effects of conversion of one type of physical trade restrictions into another on the intra-country wage inequality in a standard 2×2×2 Heckscher–Ohlin–Samuelson model. It shows that a conversion of an import-quota into an equivalent voluntary export restraint raises wage-inequality in the country importing the unskilled-labor intensive good and lowers the wage-inequality in its trading partner. This result does not depend on whether the unskilled-labor intensive good or the skilled-labor intensive good was initially subject to an import quota. Conversion of the import-quota into an equivalent import tariff, on the other hand, may lead to a rise in wage inequality in both countries. The driving force behind these results is the real income effect that conversion of one type trade restriction instrument into another results in.

Keywords: Heckscher-Ohlin-Samuelson model; Wage inequality; Import Quota; Voluntary Export Restraint; Tariff (search for similar items in EconPapers)
JEL-codes: F11 F13 F16 (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:28:y:2011:i:6:p:2628-2633

DOI: 10.1016/j.econmod.2011.07.020

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