This paper builds a two-country-two-sector trade model with a monopolistically competitive sector and non-homothetic preferences. It assumes the existence of two types of goods: necessities (which are homogeneous) and luxuries (which are differentiated) and heterogeneous labor. The implications...

It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantified how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static...

The Stolper-Samuelson theorem predicts the relative wage of high-skilled labor will increase in the U.S. but decrease in Mexico after trade, while data shows the skill premium began to rise in both countries during the 1980s. This paper presents a simple trade-based resolution of this “wage...

South Korea has had a continuous engagement with significant trade, investment and security matters simultaneously in its relations with other nations. South Korea’s bilateralism with China is a part of a larger milieu which China has been constructing, that includes the Belt and Road...

This paper addresses the question of why the price of nontradables relative to tradables is positively correlated with income per worker. I construct a two-sector model in which agents differ with respect to managerial ability. Agents sort themselves by choosing to become a worker, a manager in...

The Stolper-Samuelson theorem predicts that the relative wage of high-skilled to low-skilled labor will increase in the high-skill abundant U.S. but decrease in low-skill abundant Mexico after trade liberalization, while it actually began to rise in both countries in the late 1980s. We present a...

There have been significant improvements in traditional trade policies in the past few decades. However, these improvements can only be fully effective when they are complemented with a favorable investment climate. This study focuses on a particular aspect of investment climate, namely labor...

Nike and other companies have long been criticized for outsourcing their production to contract factories with dismal working conditions. Despite the overwhelming amount of interest, there exists no theory for studying this topic. The current paper fills this gap. In the model, the most...

This paper has made an attempt to show that in a developing economy, agriculture and Special Economic Zones (SEZ) can go simultaneously without affecting one another if appropriate subsidy policy is designed by the government. We have considered increasing returns brought about by external...

This paper proposes a 2-country 3-region economic geography model that can account for the most salient stylized facts experienced by Eastern European transition economies during the 1990s. In contrast to the existing literature, which has favored technological explanations, trade liberalization...