Trade,wages, and the specific factors model: empirical evidence from manufacturing industries in Ghana |
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Authors: | Gokhan H. Akay |
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Affiliation: | (1) Department of Economics, Trinity University, One Trinity Place, TX 77204-5882, USA |
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Abstract: | This study analyzes the impact of trade on wages in the context of the specific factors model by focusing on the link between trade and the average real wage. A recent paper by Jones and Ruffin (Rev Int Econ, 16:234–249, 2008) shows how one can use the specific factors model to predict how labor should fare from an improvement in the terms of trade. For this purpose, I use annual firm-level data on the manufacturing sector in Ghana during the period 1991–1997. I find that a ceteris paribus increase in the price of exportables in the wood industry would help labor but labor would be hurt by price increases in the food-baker, furniture, textile-garment, and metal-machinery industries. |
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Keywords: | Specific factors model Wages Terms of trade Elasticity of substitution |
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