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Long, Ngo Van
Riezman, Raymond
Soubeyran, Antoine
Year of Publication: 
Series/Report no.: 
CESifo Working Paper No. 911
Center for Economic Studies and ifo Institute (CESifo), Munich
We develop a new framework for the analysis of the impact of trade liberalization on the wage structure. Our model focuses on the decision of workers to accumulate firm-specific skills, by “on-the-job” training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.
wage gap
human capital
trade liberalization
Document Type: 
Working Paper

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