Product Variety, Finite Changes and Wage Inequality
Dutta, M., Kar, S., and Marjit, S., (2013), "Product variety, finite changes and wage inequality", Economic Modelling 35 (2013) 610–613
Posted: 12 Apr 2019
Date Written: March 19, 2019
This paper presents a model with product variety to examine the effects of emigration and capital mobility between the North and the South on production reorganization and two-sided wage inequality.We obtain conditions under which the production patterns in both North and South undergo ‘finite changes’. Overall, the production and trade patterns may be such that the South produces and exports a homogeneous good while the North, a commodity with varieties — the result driven not by technological changes, but by factor mobility. The results further suggest that the wage inequality rises in both countries in conformity with available empirical evidence.
Keywords: Product variety, Factor mobility, Finite changes, Wage inequality, Trade patterns
JEL Classification: F2, J31, L2
Suggested Citation: Suggested Citation