TY - JOUR
T1 - A dual definition for the factor content of trade and its effect on factor rewards in US manufacturing sector
AU - Delis, Agelos
AU - Mamuneas, Theofanis P.
PY - 2013/1
Y1 - 2013/1
N2 - We introduce a dual definition of the Factor Content of Trade (FCT) using the concept of the Equivalent Autarky Equilibrium. Estimating a symmetric normalized quadratic revenue function for the U.S. manufacturing sector between 1965 and 1991, we find that the FCT for capital is positive, while the FCT for skilled and unskilled labor is negative, suggesting that the Leontief Paradox is not present. Then the growth rate of the factor rewards is decomposed to the FCT, endowments, and technological change effects. We find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor.
AB - We introduce a dual definition of the Factor Content of Trade (FCT) using the concept of the Equivalent Autarky Equilibrium. Estimating a symmetric normalized quadratic revenue function for the U.S. manufacturing sector between 1965 and 1991, we find that the FCT for capital is positive, while the FCT for skilled and unskilled labor is negative, suggesting that the Leontief Paradox is not present. Then the growth rate of the factor rewards is decomposed to the FCT, endowments, and technological change effects. We find that technological change is the most important determinant in explaining wage inequality between skilled and unskilled labor.
UR - http://www.scopus.com/inward/record.url?scp=84870472698&partnerID=8YFLogxK
UR - http://onlinelibrary.wiley.com/doi/10.1111/j.1465-7295.2010.00349.x/abstract
U2 - 10.1111/j.1465-7295.2010.00349.x
DO - 10.1111/j.1465-7295.2010.00349.x
M3 - Article
SN - 0095-2583
VL - 51
SP - 72
EP - 87
JO - Economic Inquiry
JF - Economic Inquiry
IS - 1
ER -