This paper studies the effects of labor supply on relative wages in a dynamic North-South model of trade. <link rid="b7">Lai (1995</link>)-a generalization of the <link rid="b3 b4">Grossman and Helpman (1991a,b</link>, ch. 11) models-showed that the relative wage of skilled (unskilled) labor in a region is positively (negatively) related to...

This paper analyses the local stability of the steady state of the generalized Lai (1995) model, i.e. the Shimizu and Okamoto (2004) model. Lai is a modified version of Grossman and Helpman (1991a, 1991b: Ch. 11) by assuming that there are two types of labour: skilled and unskilled labours....