Scale-independent North-South trade effects on the technological-knowledge bias and on wage inequality
This paper develops a general equilibrium endogenous growth model that highlights the scale-independent mechanisms through which trade-induced North-South technological-knowledge diffusion affects the technological-knowledge bias and, thus, the paths of intra-country wage inequality. In contrast with the market-size effect, stressed in the previous literature on skill-biased technological change, the operation of the emphasized price channel following openness predicts, in line with the recent trends in developed and developing countries, an increasing skilled technological-knowledge bias, which, in turn, rises wage inequality in favor of skilled labor.
KeywordsNorth-South trade Technological-knowledge diffusion Technological-knowledge bias Wage inequality
JEL ClassificationF16 F43 O31 O33
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