نابرابری دستمزدهای نیروی کار ماهر - غیرماهر: تجزیه و تحلیل تعادل عمومی

The paper develops a static three sector competitive general equilibrium model of a small open economy in which skilled labour is mobile between a traded good sector and a non-traded good sector and unskilled labour is specific to another traded good sector. The capital is perfectly mobile among all these three sectors. We examine the effects of change in different factor endowments and of globalization on skilled–unskilled wage inequality. We find that the effect of a change of a factor endowment on wage inequality depends on the factor intensity ranking between two skilled labours using sectors and on the relative strength of the marginal effects on demand for and supply of non-tradable good. We also find that a decrease in the price of the product produced by skilled (unskilled) labour using traded good sector lowers (raises) the skilled–unskilled wage inequality.

Globalization, which means establishing connection with the rest of the world mainly through an increase in the volume of foreign trade and foreign investment, is a widely discussed international policy issue in the present era. The conventional theory states that globalization improves welfare both from the aggregative and distributive perspectives. However, various empirical studies present evidences of a growing income inequality that takes the form of a decline in income and employment of unskilled labour compared to those of skilled labour in different countries. This growing income inequality was experienced in the US between the 1960s and 1970s1 (it improved during the first half of the 1970s, but since then deteriorated steadily) and in European countries between 1978 and 1988.2 The wage inequality has also grown in many Latin American and South Asian countries in the mid-1980s.3 However, the experience of East Asian countries between 1960s and 1970s is consistent with the view of the conventional theory that a greater openness to international trade tends to reduce the skilled–unskilled wage gap in developing countries.4 Different studies provide different explanations for this increase in wage inequality. Trade liberalization and technological development are the main two controversial reasons of this phenomenon. According to Wood (1998), Beyer et al. (1999), Green et al. (2001), Behrman et al. (2000) and Isgut (2001), etc. trade liberalization causes wage inequality; but Wood, 1997 and Wood, 1998, Dev (2000) and Görg and Strobl (2002) show that technological change increases demand for skilled labour and thus worsens wage inequality. Esquivel and López (2003) shows that technological change worsens but trade liberalization improves wage inequality in Mexico. Many other empirical studies show other causes of this increasing inequality. These are international outsourcing,5 increase in the relative price of skill intensive goods,6 entry of overpopulated less developed countries like Bangladesh, China, India, Indonesia, and Pakistan in the international market7 etc. Several recent theoretical works deal with the issue of this growing wage inequality in the developing world. They adopt the framework of static competitive equilibrium models8 of small open economies in which there are two different types of labours—skilled and unskilled. These models take the ratio of wage rate of the skilled worker to that of the unskilled worker as a measure of wage inequality. We can divide the existing theoretical literature into two groups. One group of models assumes sector specific skilled labour; and this group includes works of Beladi et al. (2008), Chaudhuri and Yabuuchi, 2007 and Chaudhuri and Yabuuchi, 2008, Chaudhuri, 2004 and Chaudhuri, 2008, Marjit and Kar (2005), Marjit and Acharyya (2003), Yabuuchi and Chaudhuri (2007) and Marjit (2003) etc. They analyze how different international phenomena like emigration of skilled or labour, capital inflow, liberalization policies like reduction in import tariff rate etc. affect wage inequality. However, only Chaudhuri and Yabuuchi (2008), Marjit and Acharyya (2003) and Marjit (2003) consider the existence of non-traded goods in their models. Marjit (2003) considers non-traded intermediate good but Marjit and Acharyya (2003) and Chaudhuri and Yabuuchi (2008) consider both the non-traded intermediate good as well as non-traded final good. However, all of them assume that the non-traded good is produced by unskilled labour. Hence these group of models cannot analyze the role played by inter-sectoral mobility of skilled labour and by the change in demand for skilled labour from the non-traded good sector on the skilled–unskilled wage inequality. In this paper, we develop a static competitive general equilibrium model of a small open economy in which skilled labour is mobile between a traded good sector and a non-traded good sector. This non-traded good is a non-inferior final good but not an intermediate one. The demand for non-traded good is assumed to vary positively with the national income of the country; and thus increases in factor prices and/or factor endowments produce positive effects on the demand for non-traded good and consequently on its price. The skilled–unskilled wage ratio is changed due to this change in the equilibrium price of the non-traded good. The demand for a non-traded intermediate good depends only on the level of production of the sector using it but not on the level of disposable income of consumers. In reality, skilled workers are employed in various sectors; and a substantial part of skilled labour is employed in sectors like education, health, and legal services etc. which produce non-traded services. However, skilled workers are also employed in various manufacturing units producing technologically sophisticated traded products and in various service sectors providing different types of consultancy services to international organization. The picture of employment distribution of skilled labour is common to different parts of the globe. This motivates us to introduce inter-sectoral mobility of skilled labour between the traded good sector and the non-traded good sector in this theoretical model. A small set of existing works deals with the mobility of skilled labour between the traded good sector and the non-traded intermediate good sector; and this set includes works of Marjit et al. (2004), Marjit and Acharyya (2006) and Kar and Beladi (2004). Marjit and Acharyya (2006) develops a north south model with mobile skilled labour and non-traded intermediate good but does not consider capital as a factor of production. Kar and Beladi (2004) assumes the wage rate of skilled labour to be institutionally fixed and the non-traded intermediate good to be used in fixed proportion to produce the final traded good. On the contrary, our model analyzes the role of inter-sectoral capital mobility and endogenous determination of skilled wage rate. The model of Marjit et al. (2004) is closest to ours but it assumes that the traded good sector using intermediate good does not use capital as an input directly. We derive interesting results from our model. Capital intensity rankings between the skilled labour using non-traded good sector and the corresponding traded good sector appears to be the most important factor determining the nature of the effect on wage inequality. A capital exporting country as well as a capital importing country may experience a similar effect on wage inequality when this inter-sectoral capital intensity ranking in these two countries are opposite to each others. The same is true for a labour exporting country and a labour importing country in the case of this opposite inter-sectoral intensity ranking. Opening of trade may also produce similar effects in this case. Also the nature of the effect on wage inequality depends on the sign of the marginal effect of excess demand for non-traded good with respect to the change in parameter. This sign of the marginal demand effect may be different in different countries. Thus two countries, whose roles are dual to each others in the context of exchange of goods or movement of factors, may experience similar movements in wage inequality with different signs of marginal demand effects even if their capital intensity ranking between the traded good sector and the non-traded good sector are identical. Existing models fails to put emphasis on these points because a skilled labour using non-traded good sector does not exist there. In the older models of ‘trade and wages’ literature developed from the mid-1990s, there were almost no general analytical results. This was so because they did not consider the mobility of skilled labour and the sector specific property of unskilled labour. They also ignored the role of a non-traded final good sector in their models. This paper is organized as follows. Section 2 describes the model and Section 3 analyzes the effects of changes in factor endowments. In Section 4, we analyze the effects of exogenous changes in price of traded goods; and concluding remarks are made in Section 5.

The present paper develops a static three sector competitive general equilibrium model of a small open economy in which unskilled labour is specific to a traded good sector but the skilled labour is mobile between another traded good sector and a non-traded good sector along with perfect inter-sectoral mobility of capital. Marjit et al. (2004) is closest to ours of all other existing contributions. However, Marjit et al. (2004) considers mobility of skilled labour but not of capital between the traded good sector and the non-traded good sector. The non-traded good considered here is a final good but not an intermediate input as considered in Marjit et al. (2004). We derive many interesting results from this model; and these results are summarized in Table 2. Table 2. Summary of all comparative static results on wage inequality. Nature of change Capital intensity ranking Effect on wage inequality Comparison to existing works Similar to a Different to b Capital Inflow θK2>θKU>θK1θK2>θKU>θK1 or θKU>θK2>θK1θKU>θK2>θK1 Ambiguous c – – θKU>θK1>θK2θKU>θK1>θK2 Decrease Marjit and Kar (2005), Chaudhuri and Yabuuchi, 2007 and Chaudhuri and Yabuuchi, 2008 and Marjit et al. (2004) Yabuuchi and Chaudhuri (2007) θK2>θK1>θKUθK2>θK1>θKU Ambiguous d – – θK1>θKU>θK2θK1>θKU>θK2 or θKU>θK1>θK2θKU>θK1>θK2 Increase Marjit and Kar (2005) and Marjit et al. (2004) – Emigration of labour θK2>θKU>θK1θK2>θKU>θK1 or θKU>θK2>θK1θKU>θK2>θK1 Decrease Marjit and Kar (2005), Chaudhuri and Yabuuchi (2007) and Yabuuchi and Chaudhuri (2007) Chaudhuri (2004) θKU>θK1>θK2θKU>θK1>θK2 Ambiguous e – – θK2>θK1>θKUθK2>θK1>θKU Increase Marjit and Kar (2005)f – θK1>θKU>θK2θK1>θKU>θK2 or θKU>θK1>θK2θKU>θK1>θK2 Ambiguous g – – Skill formation θK2>θKU>θK1θK2>θKU>θK1 or θKU>θK2>θK1θKU>θK2>θK1 Increase Marjit and Kar (2005), Chaudhuri and Yabuuchi (2007) and Yabuuchi and Chaudhuri (2007) Chaudhuri (2004) θKU>θK1>θK2θKU>θK1>θK2 Decrease – – θK2>θK1>θKUθK2>θK1>θKU Decrease – – θK1>θKU>θK2θK1>θKU>θK2 or θKU>θK1>θK2θKU>θK1>θK2 Increase – – Effect of the change in the price of the traded good produced by Skilled labour sector – Decrease Chaudhuri and Yabuuchi (2007) and Marjit et al. (2004) – Unskilled labour sector Increase Chaudhuri and Yabuuchi (2007) Marjit et al. (2004)h a Marjit and Kar (2005), Chaudhuri and Yabuuchi, 2007 and Chaudhuri and Yabuuchi, 2008 and Yabuuchi and Chaudhuri (2007) do not derive the effects of capital inflow on wage inequality. We derive these effects from their models and compare those results to ours. However, in Chaudhuri and Yabuuchi, 2007 and Chaudhuri and Yabuuchi, 2008 and Yabuuchi and Chaudhuri (2007) the capital inflow produces ambiguous effects on wage inequality. b See footnote a. c Here, the results depend on the relative strength of the marginal effect on demand for the non-traded good over the corresponding marginal effect on its supply. d See footnote c. e See footnote c. f However, in Yabuuchi and Chaudhuri (2007), a change in either type of labour endowment produces ambiguous effects on wage inequality. g See footnote c. h In the case of a decrease in the price of the product produced by unskilled labour using traded good sector, the effect on wage inequality in the model of Marjit et al. (2004) is not robust. Also note that the results do not depend on the capital intensity ranking of different sectors. Table options Results summarized in Table 2 clearly show that capital intensity rankings between the skilled labour using non-traded good sector and the corresponding traded good sector appears to be the most important factor determining the nature of the effect on wage inequality. A capital exporting country as well as a capital importing country may experience a similar effect on wage inequality when this inter-sectoral capital intensity ranking in these two countries are opposite to each other’s. The same is true for a labour exporting country and a labour importing country in the case of this opposite inter-sectoral intensity ranking. Opening of trade may also produce similar effects in this case. Also the nature of the effect on wage inequality depends on the sign of the marginal effect of excess demand for non-traded good with respect to the change in parameter. This sign of the marginal demand effect may be different in different countries. Thus two countries playing opposite roles on international trade and factor movement may experience similar movements in wage inequality with different signs of marginal demand effects even if their capital intensity ranking between the traded good sector and the non-traded good sector are identical. Existing models fail to put emphasis on these points because a skilled labour using non-traded good sector does not exist there. However, our results are conditional on the assumption regarding factor mobility condition. If capital is internationally mobile, then a flow of capital would be determined endogenously. If capital is sector specific, then a change in any sector specific capital stock has a direct effect on factor prices in addition to the indirect effect obtained through the change in the price of the non-traded good. If skilled labour is specific to the traded good sector and does not move to the non-traded good sector, then our complete static results are not conditional on the capital intensity ranking between the traded good sector and the non-traded good sector. However, our model fails to consider many important aspects of reality. We rule out the possibility of unemployment of labour considering flexibility of all factor prices. The problem of imperfection of markets is not considered here. Also we consider a static model where skilled labour and capital do not accumulate over time. In this model, skilled labour and unskilled labour are assumed to be two different non-substitute factors of production. So the skilled–unskilled wage ratio is basically a relative price of two non-substitute primary factors of production. This is not the perfect way of modeling the observed empirical phenomenon because, in empirical discussions, the skilled–unskilled premium was taken to be either college/non-college income difference or non-production sector/production sector wage difference.14 We ignore cross price effects on the demand for the non-traded good. We do not analyze the role of sector specific capital. The role of backward institutions on unskilled labour using sectors is also ignored. We rule out the possibility of induced migration caused by interregional or rural–urban wage gap as analyzed by Harris and Todaro (1970), Corden and Findlay (1975) etc. This is an important point because, in reality, there is interregional variation in the wage rate of skilled labour as well as of unskilled labour. We do not do any numerical simulation here because, on the one hand, our analytical results are clearly derived and, on the other hand, a numerical exercise will unnecessarily increase the length of this paper.15 We plan to do further research in the future attempting to remove the major problems.