Trade and Inequality in Developing Countries: An Empirical Assessment

Susan Chun Zhu (zhuc@msu.edu) and Daniel Trefler

No 535, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: Developing and newly industrialized countries that have experienced the sharpest increases in wage inequality are those whose export shares have shifted towards more skill-intensive goods. We argue that this can be explained by technological catch-up. We develop this insight using a model that features both Ricardian and endowmentsbased comparative advantage. In this model Southern catch-up causes production of the least skill-intensive Northern goods to migrate South (where they become the most skill-intensive Southern goods). This raises wage inequality in both the South and the North. We provide empirical evidence that strongly supports this causal mechanism: Southern catch-up exacerbates Southern inequality by redirecting Southern export shares towards more skill-intensive goods

Keywords: international trade; inequality; Southern catch-up (search for similar items in EconPapers)
JEL-codes: F1 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-afr
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.chass.utoronto.ca/~trefler/Zhu_Inequality_Final.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.chass.utoronto.ca:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

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:red:sed004:535

Access Statistics for this paper

More papers in 2004 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann (chuichuiche@gmail.com).