Trade, Wage Gaps, and Specific Human Capital Accumulation

Van Long, Ngo; Riezman , Raymond G.; Soubeyran, Antoine

doi:10.2139/ssrn.396323

Download This Paper

Open PDF in Browser

Add Paper to My Library

Trade, Wage Gaps, and Specific Human Capital Accumulation

29 Pages Posted: 6 May 2003

See all articles by Ngo Van Long

Ngo Van Long

McGill University - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Aarhus University - Department of Economics and Business Economics; University of California, Santa Barbara (UCSB) - Department of Economics; University of Iowa - Henry B. Tippie College of Business - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); GEP; Aarhus University - School of Business and Social Sciences

Antoine Soubeyran

University of Angers - Research Group in Quantitative Saving (GREQAM)

Date Written: April 2003

Abstract

We develop a new framework for the analysis of the impact of trade liberalization on the wage structure. Our model focuses on the decision of workers to accumulate firm-specific skills, by "on-the-job" training, knowing that this means their future wages will have to be negotiated, and that the outcome of negotiation will depend on the profitability prospect of firms operating in a new trading environment. We show that trade liberalization may reduce the welfare of a developing country because of its adverse effect on skill accumulation. We also explore the effects of trade liberalization on the wage gap between skilled and unskilled workers.

Keywords: Wage Gap, Human Capital, Trade Liberalization

JEL Classification: F10, F16

Suggested Citation: Suggested Citation

Van Long, Ngo and Riezman, Raymond G. and Soubeyran, Antoine, Trade, Wage Gaps, and Specific Human Capital Accumulation (April 2003). Available at SSRN: https://ssrn.com/abstract=396323 or http://dx.doi.org/10.2139/ssrn.396323