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Trade, services and wage inequality

Philippe Askenazy

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Abstract: We develop a simple endogenous growth model with two countries, North that innovates, and South. As in Dinopoulos and Segerstrom (1999), trade liberalization raises wage inequality through stimulating R&D activity. However, the consequences of North-South trade become ambiguous when a service sector protected against international competition is included in the model. The key result is that, if the weight of service in final consumption is large enough, then trade could result in a reduction of wage inequality.

Date: 2005-10
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Citations: View citations in EconPapers (6)

Published in Oxford Economic Papers, 2005, 57 (4), pp.674-692. ⟨10.1093/oep/gpi026⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754054

DOI: 10.1093/oep/gpi026

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