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dc.titleGlobalization, Product Differentiation and Wage Inequality
dc.contributor.authorBastos, Paulo
dc.contributor.authorStraume, Odd Rune
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageThe Caribbean
dc.coverageCentral America
dc.coverageSouth America
dc.date.available2011-02-07T00:00:00
dc.date.issue2010-08-05T00:00:00
dc.description.abstractThis paper develops a two-country, general equilibrium model of oligopoly in which the degree of horizontal product differentiation is endogenously determined by rms strategic investments in product innovation. Consumers seek variety and product innovation is more skill intensive than production. Stronger import competition increases innovation incentives, and thereby the relative demand for skill. An intraindustry trade expansion following trade liberalization can therefore increase wage inequality between skilled and unskilled workers. In addition, since product differentiation is resource consuming, freer trade entails a potential trade-off between production and variety. The import competition effect highlighted by the model, which plays a key role in determining the general equilibrium, is consistent with panel data on Chilean manufacturing plants.
dc.identifier.doihttp://dx.doi.org/10.18235/0010990
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Globalization-Product-Differentiation-and-Wage-Inequality.pdf
dc.language.isoen
dc.mediumAdobe PDF
dc.publisherInter-American Development Bank
dc.subjectEconomy
dc.subject.jelcodeF15 - Economic Integration
dc.subject.jelcodeF16 - Trade and Labor Market Interactions
dc.subject.jelcodeL13 - Oligopoly and Other Imperfect Markets
dc.subject.jelcodeO31 - Innovation and Invention: Processes and Incentives
dc.subject.keywordsIDB-WP-184
dc.typeWorking Papers
idb.identifier.pubnumberWorking Papers
idb.operationRG-K1098
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