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dc.contributor.authorYang, Xiaokai
dc.contributor.authorZhang, Dingsheng
dc.date.accessioned2019-04-24T11:05:48Z
dc.date.issued1999-06
dc.identifier.citationYang, Xiaokai, and Dingsheng Zhang. “International Trade and Income Distribution.” CID Working Paper Series 1999.18, Harvard University, Cambridge, MA, June 1999.en_US
dc.identifier.urihttp://nrs.harvard.edu/urn-3:HUL.InstRepos:39399871*
dc.description.abstractThis paper applies the inframarginal analysis, which is a combination of marginal and total cost-benefit analysis, to investigate the relationship between division of labor, the extent of the market, productivity, and inequality of income distribution. The model with transaction costs and exogenous and endogenous comparative advantages shows that as transaction conditions are improved, the general equilibrium discontinuously jumps from autarky to partial division of labor with a dual structure, then to the complete division of labor where dual structure disappears. In this process different groups of individuals with different transaction conditions get involved in a certain level of division of labor at different stages of development. As the leading group gets involved in a higher level of division of level, leaving others behind dual structure emerges and inequality increases. As latecomers catch up dual structure disappears and inequality declines. When the leader goes to an even higher level of specialization, dual structure occurs and inequality increases again. Inequality decreases again as the latecomers catch up. Hence, the equilibrium degree of inequality fluctuates in this development process. The relationship between inequality and productivity is neither monotonically positive nor monotonically negative. It might not be of inverted U-curve. The key driving force of economic development and trade is improvement in transaction conditions.en_US
dc.language.isoen_USen_US
dc.publisherCenter for International Development at Harvard Universityen_US
dc.relation.isversionofhttps://www.hks.harvard.edu/centers/cid/publicationsen_US
dash.licenseLAA
dc.titleInternational Trade and Income Distributionen_US
dc.typeResearch Paper or Reporten_US
dc.description.versionAccepted Manuscripten_US
dc.relation.journalCID Working Paper Seriesen_US
dc.date.available2019-04-24T11:05:48Z


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