Trade Inequality in Developing Countries: A General Equilibrium Analysis. Susan Zhu (Michigan State University) Dan Trefler (University of Toronto and CIAR) June 5, 2014. The Model. Follow Dornbusch, Fischer and Samuelson (1980) as closely as possible.
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A General Equilibrium Analysis
Susan Zhu (Michigan State University)
Dan Trefler (University of Toronto and CIAR)
June 5, 2014
Southern Demand for Skilled Labour
=g(z– , wS )
Southern Demand for Unskilled Labour
Southern Supply of Skilled Labour
= HS / LS
Southern Supply of Unskilled Labour
In general equilibrium (z– , wS, wN) are endogenous.
Totally differentiate the 3 g.e. equations to solve for
dz– , dwS , and dwN .
Dependent Variable: dz–
Measuring wS = wHS / wLS