Multi-sector specific factors model with two mobile factors

Can Dogan and Gokhan H. Akay

International Review of Economics & Finance, 2016, vol. 46, issue C, 136-147

Abstract: This paper is an extension of the specific factors model to the study of relative wages by considering a multi-industry model with skilled and unskilled labor as the only mobile factors. We show that for changes in the price of a single industry, the impact on the skill premium is usually modest and sometimes the sign is the reverse of expectations. The elasticity of substitution between factors is critical for single-sector price changes. To generate a Stolper-Samuelson magnification effect, it is necessary to have a large number of price changes across industries intensive in either skilled or unskilled labor.

Keywords: Specific factors; Stolper-Samuelson theorem; Skill premium (search for similar items in EconPapers)
JEL-codes: F1 J24 J31 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:46:y:2016:i:c:p:136-147

DOI: 10.1016/j.iref.2016.09.002

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