Relative labor demand in an open economy

Grigoris Zarotiadis

International Advances in Economic Research, 2004, vol. 10, issue 2, 100-112

Abstract: This paper contributes to the discussion concerning the nature of the well-documented worsening of wage and employment inequality in western economies during the past three decades. It critically discusses the use of the traditional Heckscher and Ohlin approach to analyze the distributional effects of international competition. The paper also discusses an innovative theoretical scenario in order to effectively explain the empirical observations. The model overcomes the problem of a dichotomized labor market, which is an unfavorable result of the traditional approach. Furthermore, the factor-biased character of the technological change becomes endogenous as the strength of foreign competition and the induced incentives for technical innovations are taken into consideration. Copyright International Atlantic Economic Society 2004

Date: 2004
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DOI: 10.1007/BF02295673

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