Non-traded goods,firm dynamics and wages in a service economy |
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Institution: | 1. School of Economics, Henan University, Kaifeng, China;2. Chu Hai College of Higher Education, Tuen Mun, Hong Kong;3. Department of Economics, Feng Chia University, Taichung, Taiwan;4. Research Center for Business Dynamism and Social Responsibility, Feng Chia University, Taichung, Taiwan |
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Abstract: | By considering the term-of-trade and volume-of-trade effects, Jones (2012) examines the distributive effect in a competitive economy with non-traded goods. This paper reexamines the effect in an imperfectively competitive economy with firm dynamics. A rise in foreign demand can generate revenue and also mitigate market distortion, whereas skilled-unskilled wage inequality can be magnified or mitigated via the effect on firm entry or exit. Thus, how to achieve the trade-off among growth, inequality and the environment becomes an important task for government decision-makers, especially so during the pandemic of Covid-19. |
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Keywords: | Non-traded goods Firm entry/exit Wage inequality |
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