Paths of Development and Wage Variations

RSIE Discussion Paper No. 572

32 Pages Posted: 15 Feb 2008

See all articles by Kozo Kiyota

Kozo Kiyota

Keio University - Keio Economic Observatory

Multiple version iconThere are 2 versions of this paper

Date Written: November 1, 2007

Abstract

In analyzing the relationship between factor endowments and sectoral per-capita output (the path of development), Schott (2003) showed 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 factor endowments can explain Heckscher-Ohlin specialization and the wage variations across economies at the same time once the multiple-cone model allows the complete specialization.

Keywords: Paths of Development, Complete Specialization, Multiple Cones, Factor Price Equalization, Intra-industry Heterogeneity, Wage Variations, Japan

JEL Classification: F11, F14, F2, C21

Suggested Citation

Kiyota, Kozo, Paths of Development and Wage Variations (November 1, 2007). Available at SSRN: https://ssrn.com/abstract=1092667 or http://dx.doi.org/10.2139/ssrn.1092667

Kozo Kiyota (Contact Author)

Keio University - Keio Economic Observatory ( email )

Mita 2-15-45, Minato-ku
Tokyo, 108-8345
Japan

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