We bring in hierarchical education and skill formation within a standard Jonesian specific-factor model of production and trade for a developing economy. There are three types of labor, unskilled, medium skilled and high-skilled. The unskilled can only develop into medium-skilled and...

Abstract This paper attempts to provide an explanation to the debate whether infrastructure development is more effective than direct cash transfer to reduce wage disparity between skilled and unskilled workers. We use a simple general equilibrium structure to argue that in presence of symmetric...