Trade and the distribution of human capital |
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Authors: | Spiros Bougheas Raymond Riezman |
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Institution: | a School of Economics, University Park, University of Nottingham, NG7 2RD, Nottingham, UK b Department of Economics, W360, PBAB, University of Iowa, Iowa City, Iowa 52242, USA |
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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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Keywords: | Patterns of trade Income distribution Welfare Political economy |
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