TY  - CHAP
AB  - This chapter builds up a simple general equilibrium trade model where, in the absence of a credit market for human capital formation, initial distribution of capital endowment and relevant factor prices determine the size of the three income classes. The poor, with little capital, invests in traditional manufacturing, the middle-income group invests solely in human capital and the rich invests in both. Chances are that such an economy will export both high- and low-skilled goods, importing the middle one. Conventional wisdom suggests that greater skill premium encourages skill formation. In contrast, we show that higher unskilled wage and lower degree of income inequality are consistent with greater skill formation. We also show that protection discourages skill formation and may aggravate inequality.
VL  - 4
SN  - 978-1-84950-541-3, 978-0-4445-3190-2/1574-8715
DO  - 10.1016/S1574-8715(08)04011-6
UR  - https://doi.org/10.1016/S1574-8715(08)04011-6
AU  - Marjit Sugata
ED  - Sugata Marjit
ED  - Eden S.H. Yu
PY  - 2008
Y1  - 2008/01/01
TI  - Chapter 11 Skill Formation and Income Distribution in a Three Class Small Developing Economy
T2  - Contemporary and Emerging Issues in Trade Theory and Policy
T3  - Frontiers of Economics and Globalization
PB  - Emerald Group Publishing Limited
SP  - 211
EP  - 224
Y2  - 2024/04/25
ER  -