Chapter 12 Foreign Capital and Skilled–Unskilled Wage Inequality in a Developing Economy with Non-Traded Goods

Sarbajit Chaudhuri and Shigemi Yabuuchi

A chapter in Contemporary and Emerging Issues in Trade Theory and Policy, 2008, pp 225-250 from Emerald Group Publishing Limited

Abstract: The existing theoretical literature does not adequately take into consideration the existence of non-traded goods and the nature of capital mobility between the traded and the non-traded sectors in analyzing the consequences of liberalized investment policies on the relative wage inequality in the developing countries. The present chapter purports to fill in this gap by using two four-sector general equilibrium models reasonable for a developing economy. We have examined the outcome of foreign capital inflows on wage inequality when non-traded goods are intermediate inputs and final goods. Appropriate policy recommendations for improving the wage inequality have also been made.

Keywords: Skilled labour; unskilled labour; wage inequality; foreign capital inflows; non-traded goods; intersectoral capital mobility; labour market imperfection (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:fegzzz:s1574-8715(08)04012-8

DOI: 10.1016/S1574-8715(08)04012-8

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