Are Higher Levels of International Trade Causing an Increase in Income Inequality in Developed Countries? PDF Download

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Are Higher Levels of International Trade Causing an Increase in Income Inequality in Developed Countries?

Are Higher Levels of International Trade Causing an Increase in Income Inequality in Developed Countries? PDF Author: Sarah Aerni
Publisher:
ISBN:
Category : International business enterprises
Languages : en
Pages : 142

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Book Description
This study examines how increased international trade affects the own-price elasticity of the demand for labor. In a seminal work, Dani Rodrik (1997) hypothesizes that reducing trade barriers causes this elasticity to rise, as domestic firms are more able to substitute foreign labor for domestic labor. The empirical results show that the elasticities have not changed dramatically over the last two decades while trade has greatly expanded. This conclusion implies that the early empirical work done by M. Slaughter (1997) is not very robust and prompts further questions about the actual causes of the increasing wage gap in developed countries.