We analyze the medium- and long-run effects of international integration of capital markets on specialization patterns of countries. For that purpose, we incorporate induced technical change into a Heckscher-Ohlin model with a continuum of final goods. This provides a comprehensive theory that...

We analyze the medium- and long-run effects of international integration of capital markets on specialization patterns of countries. For that purpose, we incorporate induced technical change into a Heckscher-Ohlin model with a continuum of final goods. This provides a comprehensive theory that...

According to empirical studies, the relation between the relative wage of skilled workers and their relative supply is U-shaped. This finding is explained by the effect of technological change on the incentives for humancapital investments made by heterogeneous individuals. -- Wage inequality ;...