A Production Theory Approach to the Imports and Wage Inequality Nexus

Author: C.G. Tombazos

Source: Economic Inquiry, Volume 41, Number 1, 1 January 2003 , pp. 42-61(20)

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Abstract:

I employ a production theory approach to investigate the effect of fluctuations in the prices of imports of different origin on the wage differential between skilled and unskilled labor in the United States. Unlike competing methodologies, the employed framework of analysis accounts for the economy-wide effects of imports that derive from both domestic output substitution as well as downstream production. The results of this study suggest that the overall impact of imports, including those that originate in less developed economies, on the wage differential is negligible. Economy-wide dynamic processes of capital accumulation and technical change appear to play a far more important role in wage dispersion.

Document Type: Original article

Affiliations: 1: Tombazos: Senior Lecturer of Economics, Department of Economics, Monash University, Clayton, Victoria 3800, Australia.

Publication date: 2003-01-01

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Economic Inquiry is a well-respected, general economics journal. Publishing four issues per year, its papers are of high quality and endeavour to make each article easily accessible to economists who are not necessarily specialists in the article's topic area. Authors are mostly from the US, primarily from the Western regions of the States, but papers are regularly published by authors from outside the US.