International Trade and Earnings Inequality: A New Factor Content Approach

International Trade and Income Inequality∗

We propose a theory that explains why international trade can widen a wage gap between top income-earners and others. In the basic model, we consider two symmetric countries in which individuals with different abilities work either as knowledge workers, who develop products produced in a differentiated-good sector, or as production workers, who engage in actual production processes. In equilibr...

Examination of Iran's Factor Content of Trade using International Input–output Tables

Numerous models are proposed to model international trade and promote it. Vanek, instead of designing a trade pattern based on the production, introduced a pattern based on the factor content of trade. In the present study, apart from the Heckscher-Ohlin-Vanek (HOV) theorem, we attempt to determine the factor content of Iran's trade without factor price equalization by using internal input-outp...

Evaluating the Factor-Content Approach to Measuring the Effect of Trade on Wage Inequality

This paper addresses two questions: (i) can factor content of trade be used to measure the effect of trade on wage inequality in a given year, with tastes and technology constant; and (ii) can it be used to measure the contribution of trade to the change in wage inequality between two years, with tastes and technology allowed to change? Deardorff and Staiger (1988) had shown that the answer to ...

Essays on International Trade and Inequality

Title of Document: ESSAYS ON INTERNATIONAL TRADE AND INEQUALITY Lourenço Senne Paz, Doctor of Philosophy, 2009 Directed By: Professor Nuno Limão Department of Economics In this dissertation I assess the impact of developing country trade liberalization on their wage inequality by focusing on two possible channels, namely job formality and inter-industry wage premium. Informal workers are a larg...

Global economic inequality and international trade