International Capital Flows, Land Conversion and Wage Inequality in Poor Countries

Sugata Marjit and Saibal Kar ()

Open Economies Review, 2019, vol. 30, issue 5, No 6, 933-945

Abstract: Abstract Conversion of land from agricultural to industrial use has met with strong opposition in many developing countries in recent times. A number of relevant papers study welfare effects associated with willful conversion, no conversion or politically forced and manipulated conversion of land into other activities. No study, however, deals with the evolving skilled-unskilled wage gap consequent upon full or partial convertibility of land in the short and the long run. This paper shows that in a multiple-commodity world with land as a crucial input both for agriculture and industry, an influx of capital for supporting industrial production must widen the skilled-to-unskilled wage gap. If the rate of conversion of land exceeds a critical value in the short-run, the wage gap rises. Even in the long run, possibility of full conversion can raise the wage gap if agriculture is—as is indeed the case—labor-intensive in developing countries. Showing the dependence of wage inequality on the degree to which land is convertible into other uses is the paper’s unique contribution to the literature.

Keywords: Land use; Industry; Skill; Wage inequality; Developing countries; D33; D58; F21; J31 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://link.springer.com/10.1007/s11079-019-09548-4 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:openec:v:30:y:2019:i:5:d:10.1007_s11079-019-09548-4

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11079/PS2

DOI: 10.1007/s11079-019-09548-4

Access Statistics for this article

Open Economies Review is currently edited by G.S. Tavlas

More articles in Open Economies Review from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().