Foreign capital, public infrastructure, and wage inequality in developing countries

Pi, Jiancai; Zhou, Yu

doi:10.1016/j.iref.2013.05.012

Cited by 46 publications

(24 citation statements)

References 36 publications

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“…According to Pi and Zhou (2014), assume the public intermediate input is produced by the aid of unskilled labour only and its production function is a linear function for simplicity's sake and expressed as Y R ¼ L UR , where L UR is the employment of the public sector. Following Tawada (2012, 2017), the accumulation of the public intermediate good is described in the following dynamic equation:…”

Section: The Modelmentioning

confidence: 99%

International labour movement, public intermediate input and wage inequality: a dynamic approach

Wang

2019

Economic Research-Ekonomska Istraživanja

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This article incorporates the public intermediate input in a dynamic model with two final private sectors and a public sector and investigates impacts of an inflow of skilled and unskilled labour on wage inequality. The public intermediate input can be accumulated and its accumulated stock serves as a public input for private production. From the analysis, in the steady state equilibrium, an increase in the skilled and unskilled labour endowment raise the stock of public intermediate input. Also, an inflow of skilled labour reduces the wage of skilled labour and raises the wage of unskilled labour, and an inflow of unskilled labour increases both the wages of skilled and unskilled labour. Concerning their impacts on the wage inequality, an inflow of skilled labour decreases the wage inequality, while the result of an inflow of unskilled labour on wage inequality is ambiguous. If the production elasticity of the public intermediate input stock in the skill-using sector is small enough, an inflow of unskilled labour narrows down wage inequality. ARTICLE HISTORY

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Section: The Modelmentioning

confidence: 99%

International labour movement, public intermediate input and wage inequality: a dynamic approach

Wang

2019

Economic Research-Ekonomska Istraživanja

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“…The second strand of literature highlights the role of technological change in widening the wage gap (e.g., Acemoglu, ; Weiss & Garloff, ). The third strand of literature focuses on the role of governmental behavior and institutional quality (e.g., Pi & Zhou, , , , ; Anwar & Sun, ). However, the existing literature on skilled–unskilled wage inequality fails to consider the effects of rural–urban human capital disparity in the background of the Chinese economy.…”

Section: Introductionmentioning

confidence: 99%

Rural–urban human capital disparity and skilled–unskilled wage inequality in China

Zhang

2017

Review Development Economics

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This paper builds three-sector general equilibrium models to investigate how a shrink of rural-urban human capital disparity generates an impact on skilled-unskilled wage inequality in China. In the basic model where the urban skilled sector and the urban unskilled sector have no upstream and downstream linkage, we find that the wage inequality will be narrowed down if the urban skilled sector is more capital intensive than the urban unskilled sector. To capture the characteristic of China's state capitalism, we build an extended model where the urban skilled sector acts as an upstream industry for the urban unskilled sector, and find that the wage inequality will be reduced if the substitution elasticity of unskilled labor and intermediate product in the urban unskilled sector is large enough. When we consider the factual characteristics of the Chinese economy, our models predict that a shrink of rural-urban human capital disparity will be helpful to reduce the skilled-unskilled wage inequality in China.

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“…A second reason is that developing economies may have an economic structure that is quite different from developed economies, and indeed they are often characterized in the literature by numerous distortions (for recent contributions, see Chaudhuri and Yabuuchi, ; Marjit et al, ; Nakamura, ; Oladi and Gilbert, ; Pi and Zhou, ). Conclusions derived from models of IIT that do not factor these characteristics into account may be seriously misleading when applied to the developing world, or may fail to address issues of importance to developing economies.…”

Section: Introductionmentioning

confidence: 99%

North–South Trade Liberalization and Economic Welfare

Gilbert

Beladi

Oladi

2015

Review Development Economics

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We consider a general equilibrium model of a developing economy (the South) that opens to trade with a developed economy (the North). The southern economy is characterized by open urban unemployment and rural-urban migration, a competitive agricultural sector and a monopolistically competitive manufacturing sector. Hence, there is potential for both inter-and intra-industry trade to arise on liberalization, in addition to distortionary effects of duality. Southern comparative advantage in agriculture may arise from the labor market distortion and the basis for intra-industry trade is love for variety. We characterize various configurations of the trade pattern, and the resulting welfare consequences of opening to trade in this context. We illustrate a new mechanism under which in some circumstances it may be possible for trade liberalization to lower economic welfare in the South.

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Foreign capital, public infrastructure, and wage inequality in developing countries

Cited by 46 publications

References 36 publications

International labour movement, public intermediate input and wage inequality: a dynamic approach

International labour movement, public intermediate input and wage inequality: a dynamic approach

Rural–urban human capital disparity and skilled–unskilled wage inequality in China

North–South Trade Liberalization and Economic Welfare

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