International knowledge spillovers and wage inequality in developing countries

Ming cheng Wang; Chen ray Fang; Li hsuan Huang

doi:10.1016/j.econmod.2009.05.008

International knowledge spillovers and wage inequality in developing countries

Ming cheng Wang, Chen ray Fang, Li hsuan Huang

Department of Economics

Research output: Contribution to journal › Article › peer-review

20 Scopus citations

Abstract

In this paper, international knowledge spillovers are incorporated in a horizontal innovation model, designed to explain the observed uncertain effects that openness of trade can have on wage inequality in small developing countries. Openness of trade can produce two different effects: an increase in the relative price of less-skilled labor-intensive products and a wider skill discrepancy due to knowledge spillovers from the more to less developed country. The former triggers a fall in the wage premium, while the latter widens the wage premium gap in a developing country. These two opposing forces explain the observed uncertain effects of openness to trade on wage inequality in developing countries.

Original language	English
Pages (from-to)	1208-1214
Number of pages	7
Journal	Economic Modelling
Volume	26
Issue number	6
DOIs	https://doi.org/10.1016/j.econmod.2009.05.008
State	Published - Nov 2009

Keywords

Developing country
Endogenous growth model
International knowledge spillovers
Wage inequality

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10.1016/j.econmod.2009.05.008

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title = "International knowledge spillovers and wage inequality in developing countries",

abstract = "In this paper, international knowledge spillovers are incorporated in a horizontal innovation model, designed to explain the observed uncertain effects that openness of trade can have on wage inequality in small developing countries. Openness of trade can produce two different effects: an increase in the relative price of less-skilled labor-intensive products and a wider skill discrepancy due to knowledge spillovers from the more to less developed country. The former triggers a fall in the wage premium, while the latter widens the wage premium gap in a developing country. These two opposing forces explain the observed uncertain effects of openness to trade on wage inequality in developing countries.",

keywords = "Developing country, Endogenous growth model, International knowledge spillovers, Wage inequality",

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note = "Funding Information: We are grateful for the helpful comments made by two anonymous referees and seminar participants at National Central University, Tamkang University, and National Taipei University. Financial support was provided by the National Science Council of Taiwan under grant NSC 92-2415-H-008-003 to M. Wang. ",

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AU - Fang, Chen ray

AU - Huang, Li hsuan

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AB - In this paper, international knowledge spillovers are incorporated in a horizontal innovation model, designed to explain the observed uncertain effects that openness of trade can have on wage inequality in small developing countries. Openness of trade can produce two different effects: an increase in the relative price of less-skilled labor-intensive products and a wider skill discrepancy due to knowledge spillovers from the more to less developed country. The former triggers a fall in the wage premium, while the latter widens the wage premium gap in a developing country. These two opposing forces explain the observed uncertain effects of openness to trade on wage inequality in developing countries.

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KW - Endogenous growth model

KW - International knowledge spillovers

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International knowledge spillovers and wage inequality in developing countries

Abstract

Keywords

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