Trade and market integration with heterogeneous labor

Cheng-Te Lee and Deng-Shing Huang

Asia-Pacific Journal of Accounting & Economics, 2015, vol. 22, issue 4, 428-448

Abstract: This paper explores the impact of labor market integration between an advanced country (North) and backward country (South) on income distribution and pattern of trade (POT) by making use of a two-sector, competitive trade model with heterogeneous labor. We prove that, for the North, the labor market integration increases income inequality. And, for the South, the integration decreases income inequality. In addition, we find that the POT for the integrated economy might reverse.

Date: 2015
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DOI: 10.1080/16081625.2015.1012088

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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