Ginis in General Equilibrium: Trade, Technology and Southern Inequality

Susan Chun Zhu () and Daniel Trefler

No 8446, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Within developing and newly industrialized countries, rising wage inequality is both common and highly correlated with export growth. This is incompatible with the Stolper-Samuelson theorem, but suggestive of a role for technological catch-up. We develop this insight using a model that features both Ricardian and endowments-based comparative advantage. In this model Southern catch-up induces a correlation between rising inequality and export growth. It also induces a shift in trade patterns that results in skill upgrading and rising inequality in both the South and the North. A rudimentary empirical exercise reveals that, as predicted, Southern skill upgrading is correlated with the trade-weighted average rate of Southern catch-up.

JEL-codes: F1 (search for similar items in EconPapers)
Date: 2001-08
New Economics Papers: this item is included in nep-ino and nep-ltv
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Citations: View citations in EconPapers (16)

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