Globalisation and Wage Differentials: a Spatial Analysis
نویسنده
چکیده
Fujita, Krugman and Venables (FKV) develop a model in which international wage differentials encourage industrial mobility because the advantages provided by strong inputoutput linkages within high cost countries are offset by the benefits of locating in low wage economies. In this paper we argue that globalization has another important dimension. Shocks may originate in a single country but, with modern transportation and telecommunications media, these shocks spread quickly and with multiple shocks a complex process of spillovers effects will be generated. We assess these forces in an analysis of international wage convergence, identifying a non-linear relationship and showing that not all countries will converge. Given that the FKV model omits many of the causes of such non-convergence, our evidence further demonstrates that the FKV model could usefully be extended. JEL : O18, O47, R12, R15, C21
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