|
|
|
DP3420
Foreign Competition and Wage Inequality
|
|
|
|
Publication Date:
|
June 2002
|
|
|
|
|
|
|
|
|
Link to this Page:
|
www.cepr.org/pubs/dps/DP3420.asp
|
|
|
I argue that increased foreign competition can affect technical choice and skill differentials even when actual imports do not rise significantly. I present a model of General Oligopolistic Equilibrium (‘GOLE’) in which a reduction in import barriers (whether technological or policy-imposed) encourages more strategic investment by incumbent firms. The predictions accord with many of the stylised facts: higher skill premia; higher ratios of skilled to unskilled workers employed in all sectors and throughout the economy; little change in import volumes or prices; and rapid technological progress with rather little change in total factor productivity.
|
|
|
|
|