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Can international factor mobility lessen wage inequality in a dual economy?

Hamid Beladi, Sarbajit Chaudhuri () and Shigemi Yabuuchi
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Shigemi Yabuuchi: Nagoya City University, Japan

No 22, Working Papers from College of Business, University of Texas at San Antonio

Abstract: This paper analyzes the consequences of international factor movements on the skilled-unskilled wage inequality in a dual economy setup that includes unemployment and three intersectorally mobile factors of production: unskilled labor, skilled labor and capital. The theoretical literature on the issue so far has adopted the full-employment framework and hence ignored the problem of unemployment. The analysis has found that the results crucially hinge on the difference in intersectoral factor intensity condition between skilled labor and capital. A comparative analysis among different policies designed at narrowing the wage inequality in a developing economy has also been made.

Keywords: Skilled-unskilled wage inequality; Unemployment; International factor movement (search for similar items in EconPapers)
JEL-codes: F16 F22 O18 (search for similar items in EconPapers)
Date: 2006-12-16
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