Income Distribution, Technical Change and the Dynamics of International Economic Integration

29 Pages Posted: 9 Feb 2007

See all articles by Michael A. Landesmann

Michael A. Landesmann

Vienna Institute of International Economic Studies (WIIW)

Robert Stehrer

Vienna Institute of International Economic Studies (WIIW)

Abstract

This paper explores the features of a dynamic multisectoral model that focuses on the relationship between income distribution, growth and international specialization. The model is explored both for the steady-state properties and the transitory dynamics of integrated economies. Income inequality affects the patterns of growth and international specialization as the model uses non-linear Engel curves and hence different income groups are characterized by different expenditure patterns. At the same time income distribution is also reflected in the relative wage rates of skilled to unskilled workers, i.e. the skill premium, and hence the wage structure affects comparative costs of industries which have different skill intensities. The model is applied to a situation that analyses qualitatively different economic development strategies of catching-up economies (a 'Latin American' scenario and a 'East Asian' scenario).

Suggested Citation

Landesmann, Michael A. and Stehrer, Robert, Income Distribution, Technical Change and the Dynamics of International Economic Integration. Metroeconomica, Vol. 58, No. 1, pp. 45-73, February 2007. Available at SSRN: https://ssrn.com/abstract=962209 or http://dx.doi.org/10.1111/j.1467-999X.2007.00260.x

Michael A. Landesmann

Vienna Institute of International Economic Studies (WIIW) ( email )

A-1010 Vienna
Austria

Robert Stehrer (Contact Author)

Vienna Institute of International Economic Studies (WIIW) ( email )

A-1010 Vienna
Austria

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