 Transportation cost reducing technological change and wages inequalitiesCheng Cheng and Xiaobing Wang Structural Change and Economic Dynamics, 2021, vol. 59, issue C, 600-611 Abstract: This paper provides a new theory that is able to explain both domestic and international wage inequalities. The main argument is that there are broadly two types of technological change: productivity enhancing technological change and transportation cost reducing technological changes. The former increases labour productivity in the country where it is generated from. The latter reduces transportation costs internationally, which lowers the price for imported goods and increases the demand for them. This paper incorporates these technological changes into an open trade economy, where, we assume, there are two countries (i.e. home and foreign) and each country has two types of labour (i.e. skilled and unskilled). The results show that the wage inequality within one country is determined by its own combination of the two different technological changes. Both skilled and unskilled international wage inequalities are determined by the combination of the two different technological changes in two countries simultaneously. Keywords: Technological change; International trade; Wage inequality (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:streco:v:59:y:2021:i:c:p:600-611 DOI: 10.1016/j.strueco.2021.10.008 Access Statistics for this article Structural Change and Economic Dynamics is currently edited by F. Duchin, H. Hagemann, M. Landesmann, R. Scazzieri, A. Steenge and B. Verspagen More articles in Structural Change and Economic Dynamics from Elsevier |
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