Foreign Competition and Wage Inequality | Zendy

Neary J.Peter | Zendy

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Foreign Competition and Wage Inequality

Author(s) -

Neary J.Peter

Publication year - 2002

Publication title -

review of international economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.513

H-Index - 58

eISSN - 1467-9396

pISSN - 0965-7576

DOI - 10.1111/1467-9396.00358

Subject(s) - stylized fact , economics , technological change , wage inequality , competition (biology) , oligopoly , productivity , general equilibrium theory , wage , technical change , investment (military) , labour economics , foreign direct investment , international economics , macroeconomics , microeconomics , cournot competition , ecology , biology , politics , political science , law

The author argues that increased foreign competition can affect technical choice and skill differentials even when actual imports do not rise significantly. A model is presented of general oligopolistic equilibrium (GOLE) in which a reduction in import barriers (whether technological or policy–imposed) encourages more strategic investment by incumbent firms. The predictions accord with many of the stylized facts: higher skill premia; higher ratios of skilled to unskilled workers employed in all sectors and throughout the economy; little change in import volumes or prices; and rapid technological progress with rather little change in total factor productivity.

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