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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.