The Effect of Inflation on Wage Inequality: A North–South Monetary Model of Endogenous Growth with International Trade

• Autor(a) principal: Afonso, Óscar
• Data de Publicação: 2022
• Outros Autores: Sequeira, Tiago Neves
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10316/98798; https://doi.org/10.1111/jmcb.12914
• topic: Inflation; Wage inequality; North-South trade; CIA constraints; Technological- knowledge bias.

This study analyzes the e ects of in ation on intra- and inter-county wage inequality, specialization, and growth, using a North-South endogenous growth model with international trade and money. The relationship between in ation and intra-country wage inequality de- pends on rms' credit constraints and on the in ation levels. Our results indicate that in a- tion decreases specialization in skilled-production and increases intra-country wage inequality. Moreover, increasing in ation in the South increases the wage inequality gap between coun- tries. Theoretical results are con rmed through calibration and match with existing empirical evidence.