Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93033
Authors: 
Braun, Sebastian
Lechthaler, Wolfgang
Mileva, Mariya
Year of Publication: 
2014
Series/Report no.: 
Kiel Policy Brief 70
Abstract: 
Fears of increasing inequality play a dominant role in current debates on how globalization is affecting our economies. After a brief review of recent trends in wage inequality, this policy paper presents new insights on the dynamic effect of trade liberalization on wage inequality. In the context of a dynamic trade model with costly labour mobility (Lechthaler and Mileva, 2013), we show that the effect of trade liberalization on wage inequality depends on i) the time horizon considered, ii) the degree of worker mobility, and iii) the degree of trade liberalization (partial/full). In the short-run, observed increases in wage inequality are driven by an increase in inter-sectoral wage inequality, while in the long run, wage inequality is driven by an increase in the skill premium.
Document Type: 
Working Paper

Files in This Item:
File
Size
405.24 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.