Foreign capital, public infrastructure, and wage inequality in developing countries

Jiancai Pi, Yu Zhou

Research output: Contribution to journalArticle

31 Citations (Scopus)

Abstract

We establish four-sector general equilibrium models to investigate how an inflow of foreign capital influences the skilled-unskilled wage inequality in the presence of the endogenous public infrastructure provision. In the situation of the pure public infrastructure provision, the change of the skilled-unskilled wage inequality is determined by the comparison of the capital distributive shares in urban sectors. In the case of the semi-public infrastructure provision, the change of the skilled-unskilled wage gap is determined by the factor substitution elasticities in urban sectors. A potential extension is also given and it confirms the robustness of the obtained results.

Original languageEnglish
Pages (from-to)195-207
Number of pages13
JournalInternational Review of Economics and Finance
Volume29
DOIs
Publication statusPublished - 2014 Jan 1
Externally publishedYes

Keywords

  • Foreign capital
  • Pure public infrastructure
  • Semi-public infrastructure
  • Wage inequality

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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