Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94749
Authors: 
Dinopoulos, Elias
Segerstrom, Paul
Year of Publication: 
1996
Series/Report no.: 
IUI Working Paper 471
Abstract: 
This paper presents a dynamic general equilibrium model of trade between two advanced countries in which both innovation and skilled acquisition rates are endogenously determined. The model offers a North-North (as opposed to a North-South) trade explanation for increasing relative wage inequality. A global reduction in trade barriers increases R&D investment and accelerates the pace of technological progress. It also reduces the relative wage of unskilled workers and results in skill upgrading, if and only if R&D is the skill-intensive activity relative to manufacturing of final products. Trade liberalization does not affect domestic relative prices in either of the two countries.
Subjects: 
Economic growth
R&D
Protection
Relative Wages
JEL: 
D41
F10
F12
F13
Document Type: 
Working Paper

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