A dual definition for the factor content of trade and its effect on factor rewards in US manufacturing sector

Agelos Delis, Theofanis P. Mamuneas

Research output: Contribution to journalArticle

Abstract

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.
Original languageEnglish
Pages (from-to)72-87
Number of pages16
JournalEconomic Inquiry
Volume51
Issue number1
Early online date15 Dec 2010
DOIs
Publication statusPublished - Jan 2013

Fingerprint Dive into the research topics of 'A dual definition for the factor content of trade and its effect on factor rewards in US manufacturing sector'. Together they form a unique fingerprint.

  • Cite this