Trade and Wage Inequality in Developing Countries


  • Sugata Marjit,

    1. Marjit: Professor, Centre for Studies in Social Sciences, Calcutta 700019, West Bengal, India. Phone 91–33–440–6860, Fax 91–33–556–6680, E-mail
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  • Hamid Beladi,

    1. Beladi: Professor, Center for Agricultural Policy and Trade Studies, North Dakota State University, Fargo, ND 58105. Phone 1–701–231–7334, Fax 1–701–231–7400, E-mail
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  • Avik Chakrabarti

    1. Chakrabarti: Assistant Professor, Department of Economics, University of Wisconsin–Milwaukee, Milwaukee, WI 53201. Phone 1–414–229–4680, Fax 1–414–229–3860, E-mail
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      We thank anonymous referee(s) for very useful comments and suggestions on an earlier version of this article. The usual disclaimer applies.


In this article we provide a theoretical analysis of the possible impact of trade and fragmentation on the skilled–unskilled wage gap in a small developing economy. In particular, we illustrate the possibility of a decline in the relative wage of the unskilled labor following an improvement in the terms of trade. (JEL F1, F11, F12)