Ginis in General Equilibrium: Trade, Technology and Southern Inequality

55 Pages Posted: 26 Aug 2001 Last revised: 18 Jul 2014

See all articles by Susan Chun Zhu

Susan Chun Zhu

Michigan State University - Department of Economics

Daniel Trefler

University of Toronto - Rotman School of Management; National Bureau of Economic Research (NBER)

Date Written: August 2001

Abstract

Within developing and newly industrialized countries, rising wage inequality is both common and highly correlated with export growth. This is incompatible with the Stolper-Samuelson theorem, but suggestive of a role for technological catch-up. We develop this insight using a model that features both Ricardian and endowments-based comparative advantage. In this model Southern catch-up induces a correlation between rising inequality and export growth. It also induces a shift in trade patterns that results in skill upgrading and rising inequality in both the South and the North. A rudimentary empirical exercise reveals that, as predicted, Southern skill upgrading is correlated with the trade-weighted average rate of Southern catch-up.

Suggested Citation

Chun Zhu, Susan and Trefler, Daniel, Ginis in General Equilibrium: Trade, Technology and Southern Inequality (August 2001). NBER Working Paper No. w8446. Available at SSRN: https://ssrn.com/abstract=281077

Susan Chun Zhu (Contact Author)

Michigan State University - Department of Economics ( email )

214 Marshall Hall
East Lansing, MI 48824
United States
517-355-9647 (Phone)
517-432-1068 (Fax)

HOME PAGE: http://www.msu.edu/~ec/faculty/zhu/zhu.html

Daniel Trefler

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada
416-978-4190 (Phone)
416-978-6713 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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