Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10477348 | Journal of International Economics | 2005 | 28 Pages |
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 endowments-based 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
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Authors
Susan Chun Zhu, Daniel Trefler,