This paper examines an economic union where oligopolistic firms produce by skilled and unskilled labor and do R&D by skilled labor. The planner of the union accepts new members to the union, deregulates the product market through anti-trust policy and regulates the labor market through a minimum wage for unskilled labor. Firms and workers lobby the planner for prospective policy. It is shown th...

Do people from different countries and different backgrounds have similar preferences for how much more the rich should earn than the poor? Using survey data from 40 countries (N = 55,238), we compare respondents' estimates of the wages of people in different occupations-chief executive officers, cabinet ministers, and unskilled workers-to their ideals for what those wages should be. We show th...

Capital Deepening and Wage Differentials: Germany vs. US Capital deepening may affect the evolution of the wage differential between skilled and unskilled workers differently in countries with different labor market institutions. If labor market institutions raise the relative wage of unskilled workers in Germany, firms have incentives to invest relatively more into capital equipment complement...

Skill-Biased Technical Change is a shift in the production technology that favors skilled over unskilled labor by increasing its relative productivity and, therefore, its relative demand. Traditionally, technical change is viewed as factor-neutral. However, the observed rapid rise in the relative wage of skilled workers in conjunction with an upward trend in their relative supply means that rec...

This paper develops a two-country new trade theory framework with two types of labor (skilled and unskilled) and an imperfect labor market arising from country-specific real minimum wages. It examines welfare implications of trade liberalization and spillover effects of labor market shocks in a global economy. The model identifies two key forces that shape the results: i) external scale effects...

The experience of East Asia in the 1960s and 1970s supports the theory that greater openness to trade tends to narrow the wage gap between skilled and unskilled workers in developing countries. In Latin America since the mid-1980s, however, increased openness has widened wage differentials. This conflict of evidence is probably not the result of differences between East Asia and Latin America. ...

BACKGROUND The social gradient in disability pension is well recognized, however mechanisms accounting for the gradient are largely unknown. The aim of this study was to examine the association between occupational class and subsequent disability pension among middle-aged men and women, and to what extent work-related factors accounted for the association. METHODS A subsample (N = 7031) of th...

This note studies the impact on the adjustment process of Uruguayan manufacturing firms’ capital, and unskilled and skilled labor demands associated with increasing import penetration from China and India. The adjustment process is defined as the percentage of the gap between desired (optimal) and actual factor employment levels closed by the firm. Desired factor levels are obtained from a coun...

Differences in income levels across countries are generally attributed to differences in productivity. In studies of internal migration (e.g. within the U.S.), it is commonly observed that skilled workers move much more than unskilled workers. The paper analyzes the implications of such differential migration, using a model in which efficiency differences are labor-augmenting, and free trade in...