نابرابری های دستمزد نیروی کار ماهر - فاقد مهارت، تنوع محصول، ورودی های عمومی و افزایش بازده: تجزیه و تحلیل تعادل شخص عمومی

The paper develops a four sector small open economy model with two traded final good sectors, a public intermediate good producing sector and a nontraded good sector producing varieties of intermediate goods. There are three primary factors: capital, skilled labour and unskilled labour. Industrial sector producing a traded good uses capital, intermediate goods and skilled labour as inputs. Intermediate goods producing sector also uses capital and skilled labour. Public input producing sector and the agricultural sector producing the other traded good use capital and unskilled labour as inputs. It is shown that, if production technologies are the same for the agricultural sector and the public input producing sector and if the scale elasticity of output is very low, then an increase in capital stock (unskilled labour endowment) raises (lowers) the skilled–unskilled wage ratio. However, an increase in skilled labour endowment does not produce any unambiguous effect. On the other hand, an increase in the tax rate on industrial output and/or an increase in the price of the agricultural product, armed with the same set of assumptions, lowers the skilled–unskilled wage ratio. Highlights ► An increase in capital stock raises the skilled–unskilled wage ratio. ► An increase in unskilled labour endowment raises lowers the skilled–unskilled wage ratio. ► An increase in the tax rate on industrial output lowers the skilled–unskilled wage ratio. ► An increase in the price of the agricultural product lowers the skilled–unskilled wage ratio.

Increasing wage inequality is one of the important issues of research in Development Economics in recent years. The conventional belief is that globalization is welfare improving both from the aggregative perspective and from the distributive perspective. However, with regard to its distributive effects, various empirical works point out that skilled–unskilled wage inequality has grown up in many developed1 and less-developed2 countries. Different studies offer different explanations for this phenomenon; and, among them, trade liberalization and technological progress appear to be two important controversial reasons3 of this. Also international outsourcing,4 increase in the price of skill intensive good,5 entry of unskilled labour surplus low income countries in the international market6 etc. are claimed to be alternative causes of this increasing wage inequality by many other empirical studies. There exists a lot of theoretical works explaining this problem of growing wage inequality. Theoretical models though differ in various features have a common property of introducing two different types of labour- skilled and unskilled. The ratio of wage rate of the skilled worker to that of the unskilled worker is taken as a measure of wage inequality in these models. Many of these theoretical models are dynamic and intertemporal in nature.7 Some of them adopt the framework of static competitive general equilibrium models8 of small open economies; and others adopt product variety framework with monopolistic competition.9 The present work is an addition to the existing theoretical literature based on product variety framework. Among the existing static product variety models, Glazer and Ranjan (2003) introduces preference heterogeneity assuming that skilled workers prefer to consume skill intensive goods. However, their model does not have any public intermediate good. Anwar, 2006a and Anwar, 2009 and Anwar and Rice (2009) analyse the problem of wage inequality using endogenous product variety framework with specialization-based external economics; but they also do not consider the role of public input in their model. Anwar, 2005 and Anwar, 2006b introduce a public input producing sector in their models in the presence of specialization-based external economics. However, they have only one type of labour in their models; and hence can not explain the skilled–unskilled wage inequality. The model developed in the present paper is an extension of the works of Anwar, 2006a and Anwar, 2009 and Anwar and Rice (2009) introducing a public input producing sector like that in Anwar (2005, 2006) and consisting of two types of labour-skilled and unskilled. We develop a four sector small open economy model with two traded good sectors, a public intermediate good producing sector and a private nontraded good sector producing varieties of intermediate goods. There are three primary factors in this model- skilled labour, unskilled labour and capital. The public intermediate good plays the role of reducing the fixed cost of production of nontraded private intermediate goods. Production functions of all these sectors, except for varieties of private intermediate goods sector, satisfy all standard neo-classical properties including constant returns to scale (CRS). However, in the private intermediate goods producing sector, production function of each of these varieties satisfies increasing returns to scale (IRS). We now turn to explain our motivation to introduce a public input in a general equilibrium model. In reality, public infrastructure plays a significant role to the development of market economics. The study of Ram (1986), based on data of many developed and developing countries, points out a positive relationship between the government size and the growth of national income. In the context of Korean economy, Kim (1998) shows that infrastructure investment leads to economic growth as well as inflation. Rioja (1999) argues that public infrastructure investment can lead to sizeable increase in GDP. Ang (2008), Hill (2007) and Appleyard et al. (2007) show that infrastructural development promotes foreign investment. On the other hand, Delorme et al. (1999) finds a negative relationship between public infrastructure and technical efficiency. Our main purpose is to examine whether new comparative static results can be obtained in this model as compared to those available in the existing literature. We derive the following interesting results. If production technologies are the same10 for the agricultural sector and the public input producing sector and if the scale elasticity of output in the industrial sector is very low, then an increase in capital stock (unskilled labour endowment) raises (lowers) the skilled–unskilled wage ratio. This result is qualitatively similar to the result obtained by Anwar (2006a) but not quantitatively. The magnitude of the comparative static effect differs in the present model from that in Anwar (2006a) because here public intermediate good lowers fixed cost of producing varieties of private intermediate goods. This is also qualitatively similar to the result obtained by Glazer and Ranjan (2003) with respect to a change in unskilled labour endowment. However, an increase in skilled labour endowment with the same set of assumptions makes this relative wage move in any direction in this model while in Anwar (2006a), we find a unambiguous negative effect on it. On the other hand, an increase in the tax rate on industrial output and/or an increase in the price of the agricultural product, armed with the same set of assumptions, lowers the skilled–unskilled wage ratio in this model. The result, though qualitatively similar to that in Anwar (2009) with respect to an increase in the price of the agricultural good, differs quantitatively because the magnitude of the comparative static effect is higher in the present model than that in Anwar (2009). Neither Anwar (2009, 2006a) nor Anwar and Rice (2009) analyse this comparative static effect with respect to change in the income tax rate. This paper is organized as follows. Section 2 describes the model and Section 3 analyzes its various comparative static properties. Effects of changes in factor endowments on skilled–unskilled wage inequality are described in subsection 3.1. In subsection 3.2, we analyze effects of exogenous changes in prices of traded goods and of the tax-rate on skilled–unskilled wage inequality. Concluding remarks are made in Section 4.

The present paper develops a static product variety model of a small open economy with two traded final good sectors, a public intermediate good producing sector and a nontraded good sector producing varieties of intermediate goods and with three primary factors – skilled labour, unskilled labour and capital. The role of this public intermediate good is to reduce the fixed cost of production of varieties of non traded private intermediate goods. Production functions of all these sectors, except for varieties of intermediate goods sector, satisfies all standard neo-classical properties including constant returns to scale (CRS). However, in the varieties of intermediate goods producing sector, production function of each of these varieties satisfies increasing returns to scale (IRS). We use a framework that on the one hand combines features of Anwar, 2006a and Anwar, 2009 and Anwar and Rice (2009) and on the other hand introduce a public intermediate good following Anwar, 2005 and Anwar, 2006b. We derive results which are interesting in comparison to those obtained from works of Anwar, 2006a and Anwar, 2009 and Anwar and Rice (2009). If the production technology is the same for the agricultural sector and the public input producing sector18 and if the scale elasticity of output is very low, then an increase in capital stock (unskilled labour endowment) raises (lowers) the skilled–unskilled wage ratio. This result is qualitatively similar to the result obtained by Anwar (2006a) though the magnitude of the effect in this model is different from that in Anwar (2006a). This above result is also qualitatively similar to the result obtained by Glazer and Ranjan (2003) with respect to a change in unskilled labour endowment. However, an increase in skilled labour endowment makes this skilled–unskilled wage ratio to move in any direction in this model while in Anwar (2006a), we find an ambiguous negative effect. On the other hand, an increase in the tax rate on industrial output or an increase in the price of agricultural product lowers the skilled–unskilled wage ratio with the same set of sufficient conditions. This result is qualitatively similar to the result obtained by Anwar (2009) in the context of an increase in the price of the agricultural good. However, quantitatively, the rate of decline in relative wage is higher in the present model than that in Anwar (2009). Our comparative exercises must have important policy implications. Increase in capital stock takes place through a liberal policy to foreign capital inflow and direct foreign investment. Increase in skilled labour endowment is the result of the policy of subsidizing higher education sector. Subsidization to the agricultural sector leads to a rise in the price of its product. However, how to finance a subsidy is always a problem. However, our model fails to consider many important aspects of reality. We rule out the possibility of unemployment assuming flexibility of all factor prices. Also we consider a static model where skilled labour and capital do not accumulate over time. There is no education sector that produces skilled labour and also there is no nontraded final good in this model. Industrial sector does not use unskilled labour and the public intermediate good producing sector does not use skilled labour as inputs. Public input is used neither in the agricultural sector nor in the final good producing industrial sector. We do not consider Lindahal pricing and optimum provision of the public input. We plan to do further research in the future removing these problems.