Product variety, finite changes and wage inequality

Dutta, Meghna; Kar, Saibal; Marjit, Sugata

doi:10.1016/j.econmod.2013.08.020

Cited by 7 publications

(3 citation statements)

References 25 publications

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“…Krugman’s (1979) love-of-variety approach to intra-industry trade also has a built-in complementarity relationship, though at the extensive margin: labour immigration increases the number of varieties produced and exported. In a more recent article, Dutta et al (2013) have studied the impact of emigration on product variety and wage inequality under an oligopolistic market structure. In extending this strand of literature, we focus on the relationship between the emigration of unskilled workers and export promotion through quality upgradation.…”

Section: Introductionmentioning

confidence: 99%

Emigration, Tax on Remittances and Export Quality

Ganguly

Acharyya

2021

South Asian Journal of Macroeconomics and Public Finance

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We examine the implications of the emigration of unskilled workers for the quality of a skill-based good exported by a small open economy. This issue is relevant in the context of quality constraints faced by the developing countries like China and India in promoting their exports, on the one hand, and the significantly large emigrations of workers, particularly unskilled workers, which lower their productive capacities, on the other hand. We show that even though unskilled workers are not directly used in the production of quality-differentiated export goods, their emigration would lower export quality when quality upgradation requires more intensive use of skilled workers relative to capital. This result follows from the complementarity between skilled and unskilled wages in a competitive general equilibrium model. A quality-content production subsidy in such a case can mitigate the adverse effects of emigration. The significantly large remittances received from unskilled emigrants create scope for taxing such remittances to finance the subsidy. JEL Classification: F16, F20, F22, F24

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Section: Introductionmentioning

confidence: 99%

Emigration, Tax on Remittances and Export Quality

Ganguly

Acharyya

2021

South Asian Journal of Macroeconomics and Public Finance

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“…Market size as a crucial element also comes out quite clearly with greater size determining greater number of varieties. Helpman (1981), Falvey (1981) and later applications by Das (2002Das ( , 2005, Dutta, Kar and Marjit (2013), etc. made attempts to integrate HOS into a typical DSK structure by increasing number of sectors.…”

Section: Introduction and The Contextmentioning

confidence: 99%

Monopolistic Competition, Optimum Product Diversity, and International Trade - the Role of Factor Endowment and Factor Intensities

Marjit

Mandal

2021

SSRN Journal

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In this paper we revisit the influential theory of monopolistic competition and optimum product variety as developed by Dixit and Stiglitz (1977) with applications in international trade by Krugman (1979Krugman ( ,1980, by modeling fixed and variable costs of production in terms of underlying use of skilled and unskilled labor in a single good model. This is different from earlier work on multi sector variant of Krugman cum Heckscher-Ohlin-Samuelson model such as Helpman (1981) and others. In our structure factor endowment and factor intensities determine both number of varieties and output per variety in a closed economy mimicking the features of Heckscher-Ohlin-Samuelson model. Differences in factor endowments across countries determine the pattern of trade between varieties and output per variety, which is indeterminate in a standard single good Dixit-Stiglitz-Krugman model. Later we reflect on wage inequality and unemployment providing some interesting results.

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“…The issue of finite change in association with two-sided wage inequality has been tried in a very recent attempt by Dutta, Kar and Marjit (2013). They used a variant of Krugman (1981) where both North and South start with production of both homogenous good and slightly differentiated varieties.…”

Section: International Factor Mobility Wage Distribution and Finite mentioning

confidence: 99%

Finite Change—Implication for Trade Theory, Policy and Development

Marjit

Mandal

2015

India Studies in Business and Economics

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The paper traces the evolution of trade theory beyond the standard 2X2 models and looks for implications of higher dimensional structures and adjustment problems with large shocks. Typically trade theory and policy talk about expansion and contraction of existing activities. In this paper we explore various situations where certain activities vanish altogether. Similarly other activities may come to existence following major changes in the economic environment. Such regime shifts are interpreted as finite changes as opposed to infinitesimal alterations. These changes allow us to think differently about standard policy changes, all of which have direct implications for developing countries. Emigration, wage inequality and distribution, non-equivalence of tariff and quota in competitive models, capital mobility and corruption are some of the applications involving such finite change. At a theoretical level the paper starts by an interesting interpretation of factor price "nonequalization" hypothesis in the basic Heckscher-Ohlin-Samuelson type models without depending on standard text book type argument.

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Product variety, finite changes and wage inequality

Cited by 7 publications

References 25 publications

Emigration, Tax on Remittances and Export Quality

Emigration, Tax on Remittances and Export Quality

Monopolistic Competition, Optimum Product Diversity, and International Trade - the Role of Factor Endowment and Factor Intensities

Finite Change—Implication for Trade Theory, Policy and Development

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