Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/266159 
Year of Publication: 
2019
Citation: 
[Journal:] Review of World Economics [ISSN:] 1610-2886 [Volume:] 155 [Issue:] 3 [Publisher:] Springer [Place:] Heidelberg [Year:] 2019 [Pages:] 407-457
Publisher: 
Springer, Heidelberg
Abstract: 
We develop a dynamic general equilibrium trade model with comparative advantage, heterogeneous firms, heterogeneous workers and endogenous firm entry to study wage inequality during the adjustment after trade liberalization and potential policy responses to reduce wage inequality. In the short run, inter-sectoral wage inequality is high but then recedes as more and more workers move to the expanding exporting sector. The skill premium does not change much in the short run but increases substantially in the medium and long run. Training subsidies are more powerful than sector-migration subsidies in reducing the wage inequality induced by trade liberalization.
Subjects: 
trade liberalization
wage inequality
adjustment dynamics
JEL: 
E24
F11
F16
J62
Published Version’s DOI: 
Document Type: 
Article
Document Version: 
Manuscript Version (Preprint)

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