Capital market distortion, firm entry and wage inequality

Beladi, Hamid and Chao, Chi-Chu and Eec, Mong Shan and Yud, Eden S.H,(18 June 2019), Capital market distortion, firm entry and wage inequality. , China Economic Review 56 (2019) 101312, UNSPECIFIED

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Distortions in the capital market are notable in developing economies like China. By building up a dual production structure with oligopolistic competition in urban manufacturing, this paper investigates the distributional and welfare effects of capital market distortions. We find that in the short run, an increase in the capital market distortion in favor of urban firms can lower both the skilled and unskilled wages. However, in the long run, the preferential policy on reducing capital cost to the urban sector attracts new entry of firms, which can worsen the skilled-unskilled wage inequality in the economy. This firm-entry effect of the capital market distortion on wage inequality is empirically confirmed for China
Keywords : Capital market distortion Lucas paradox Firm entry Wage inequality, UNSPECIFIED
Journal or Publication Title: China Economic Review 56 (2019) 101312
Volume: 56
Item Type: Article
Subjects: Manajemen
Depositing User: Yuwono Yuwono
Date Deposited: 16 Dec 2019 12:40
Last Modified: 16 Dec 2019 12:40

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