Abstract

http://ssrn.com/abstract=747124
 
 

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Trade and the Distribution of Human Capital


Raymond G. Riezman


University of Iowa - Henry B. Tippie College of Business - Department of Economics; GEP; CESifo (Center for Economic Studies and Ifo Institute)

Spiros Bougheas


University of Nottingham - School of Economics

June 2005

CESifo Working Paper No. 1475

Abstract:     
We develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of the two human capital distributions. We also show that the two distributions of endowments also completely determine the effects of trade on income inequality. Then, we prove that there are long-term gains from trade if the marginal utility of income is constant or as long as losers from trade are compensated by winners. Finally, we look at a simple majority voting model. It turns out depending on the distribution of human capital, autarky and free trade with and without compensation may be the outcome of majority voting.

Number of Pages in PDF File: 33

Keywords: patterns of trade, income distribution, welfare, political economy

JEL Classification: F1

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Date posted: September 8, 2009  

Suggested Citation

Riezman , Raymond G. and Bougheas, Spiros, Trade and the Distribution of Human Capital (June 2005). CESifo Working Paper No. 1475. Available at SSRN: http://ssrn.com/abstract=747124

Contact Information

Raymond G. Riezman (Contact Author)
University of Iowa - Henry B. Tippie College of Business - Department of Economics ( email )
108 Pappajohn Building
Iowa City, IA 52242
United States
319-335-0832 (Phone)
319-335-1956 (Fax)
GEP ( email )
University Park
Nottingham, NG7 2RD
United Kingdom
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
HOME PAGE: http://www.cesifo.de
Spiros Bougheas
University of Nottingham - School of Economics ( email )
University Park
Nottingham, NG7 2RD
United Kingdom
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