Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Globalization and Technical Change No. B14-V2
We look at managerial and production wages in countries that differ in size and relative endowments. Production labor is assumed to be a variable input composed of tradable tasks, while managerial labor is a fixed, non-tradable input. Task performance is subject to increasing returns to scale on the country level, as in Grossman & Rossi-Hansberg (2009). We first analyze country size and relative endowment effects on wages, ruling out task trade altogether, followed by numerical simulations highlighting the degree of freeness of task trade as an important further determinant of relative wages, both within and across countries.