Trade Liberalization and Symmetric Wage-Gap

Abstract

From the above discussions it is clear that in the standard 2x2x2 HOS framework or its specific-factor variant, trade liberalization must affect the wage-gap asymmetrically in the North and South. Only when endowment differences across the nations are significant and technology exhibits factor intensity reversal, can we expect symmetric changes in the wage-gap as is empirically observed. But this is only a special case. Extension of the basic model to more than two factors of production also cannot explain the widening wage-gap phenomenon.