Research Seminar

Rigid price adjustment, trade liberalization, and wage inequality — Wolfgang Lechthaler

21 Jan 2020

12:30
-
13:30
Institut für Weltwirtschaft

Speaker

Wolfgang Lechthaler (Kiel Institute)

Abstract

We build a dynamic model of two countries, two sectors and two factors with firm heterogeneity and price rigidity to analyze the short-run and long-run consequences of trade liberalization for nominal and real wages and wage inequality. We find that the development of nominal and real wages can diverge substantially with trade liberalization potentially leading to increases in real wages and decreases in nominal wages for unskilled workers. The conduct of monetary policy plays an important role for these developments.

Authors

Wolfgang Lechthaler (Kiel Institute) — Mariya Mileva (California State University, Long Beach)

Room

Lecture Hall (A-032)