Liberalization, the wage Differential, and Capital-Skill Complementarity: A CGE Analysis

  • Hikari BanEmail author


This paper studies how capital-skill complementarity affects the wage differential and economic growth caused by liberalization using a CGE model. It finds that capital-skill complementarity affects the changes caused by liberalization, especially when capital accumulation is considered. The wage differential will be amplified by capital-skill complementarity in all regions. As for GDP, capital-skill complementarity has a positive influence in capital-outflow countries, but a negative influence in capital-inflow countries within plausible ranges of parameter values. These findings may have some political implications for developing countries.

Key words

Liberalization Wage Differential Capital-Skill Complementarity CGE 

JEL Classification

F16 F17 D58 


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Copyright information

© Japan Economic Policy Association (JEPA) 2006

Authors and Affiliations

  1. 1.Kobe Gakuin UniversityNishi-kuJapan

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