Foreign capital, pollution control, and wage inequality in developing countries

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• 作者：Jiancai Pi ; ^{pi2008@nju.edu.cn} ; Pengqing Zhang ^{yourdavidchang@163.com}
• 关键词：F21 ; J31 ; Q58
• 刊名：International Review of Economics & Finance
• 出版年：2017
• 出版时间：March 2017
• 年：2017
• 卷：48
• 期：Complete
• 页码：280-288
• 全文大小：367 K
• 卷排序：48

文摘

This paper aims at studying how foreign capital and pollution control influence skilled-unskilled wage inequality in developing countries through three-sector general equilibrium models. In the basic model with urban unemployment, we find that an inflow of foreign capital will expand the skilled-unskilled wage inequality if the elasticity of substitution between labor and capital in the urban unskilled sector is large enough, and that stricter pollution control will expand the wage inequality if the elasticity of substitution between labor and pollution is small enough. In the extended model with full employment, we find that the intensity of capital plays a crucial role. In addition, when pollution externalities are taken into account, the main conclusions will not change significantly.