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Paths of Development and Wage Variations
Author(s) -
Kiyota Kozo
Publication year - 2011
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/j.1467-9396.2011.00976.x
Subject(s) - economics , wage , per capita , cone (formal languages) , econometrics , labour economics , mathematics , population , demography , algorithm , sociology
In analyzing the relationship between factor endowments and sectoral per capita output (the paths of development), it was shown empirically that the number of cones was neither one nor three but two, and that all countries fall into one of these two cones. This is a puzzle, because it is inconsistent with large wage variations across economies. This paper attempts to solve this puzzle, introducing complete and incomplete specialization into a multiple‐cone model. Empirical results reveal that the two‐cone Heckscher–Ohlin (HO) model can be consistent with HO specialization and wage variations across economies.