Trade and the distribution of human capital |
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Institution: | 1. School of Economics, University Park, University of Nottingham, NG7 2RD, Nottingham, UK;2. Department of Economics, W360, PBAB, University of Iowa, Iowa City, Iowa 52242, USA;1. Department of Economics, Hiroshima University, 1-2-1 Kagamiyama, Higashi-Hiroshima, Hiroshima, 739-8525, Japan;2. School of Business Administration, Kwansei Gakuin University, 1-155 Uegahara-1bancho, Nishinomiya, Hyogo, 662-8501, Japan;1. China Europe International Business School, 699 Hongfeng Road, Pudong, Shanghai 201206, PR China;2. School of Accounting and Finance, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong |
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Abstract: | We develop a two-country, two-sector model of trade where the only difference between the two countries is their distribution of human capital endowments. We show that even if the two countries have identical aggregate human capital endowments the pattern of trade depends on the properties of the two human capital distributions. We also show that the two distributions of endowments also completely determine the effects of trade on income inequality. We also look at a simple majority voting model. It turns out autarky and free trade with and without compensation may be the voting outcome. |
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