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Daily Archives: June 2, 2017

The endogenous skill bias of technical change and wage inequality in developing countries

The Journal of International Trade & Economic Development, Volume 25, 2016 – Issue 8

This paper draws on existing empirical literature and an original theoretical model to argue that technical change does not have to be skill-biased in developing countries. Instead, the extent to which technology adoption in developing countries favors skilled workers depends on a number of factors. Free trade induces technology that favors skilled workers in skill-abundant developing countries and that favors unskilled workers in skill-scarce developing countries, and therefore amplifies the predicted wage effects of trade liberalization. Developing countries experience technical change that is skill-biased when imported skill-biased technologies become relatively cheaper. Increased skill supply further biases technical change in favor of skilled labor. These features aid our understanding of the observed rises in inequality within developing countries, the absence of a significant downward effect of expanded educational attainment on skill premia, and the differential effects of trade liberalization on inequality.

URL: http://www.tandfonline.com/doi/full/10.1080/09638199.2016.1193887

Courtesy: T&F

Income inequality and export prices across countries

Lisandra Flach and Eckhard Janeba

Canadian Journal of Economics, Volume 50Issue 1, February  2017

This paper provides theory and evidence on the links between income inequality within a destination country and the patterns of trade and export prices. The theoretical framework relates income inequality to product quality and prices using a simple demand composition effect. The model predicts that a more unequal income distribution in a destination country leads to higher average prices, though the effect is nonlinear and disappears for rich enough countries. The predictions are tested using detailed firm-level data. Controlling for income per capita, prices are systematically higher in more unequal destinations, and the strength of this effect depends on income per capita. Results are particularly important for middle-income countries and hold only for differentiated goods, and in particular for products with a high degree of vertical differentiation.

URL: http://onlinelibrary.wiley.com/doi/10.1111/caje.12254/abstract

Courtesy: Wiley online library

The World Economy, Volume 40, Issue 4, April 2017

Articles

The Journal of Industrial Economics, Volume 65, Issue 1, March 2017

Articles

The Journal of Finance, Volume 72, Issue 2, April 2017

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