Wage inequality in the U.S. and its trading partner Mexico has increased since the late 1970s, while that in some newly industrializing economies (NIEs) such as Taiwan and South Korea decreases. We provide a new explanation whereby a rise in the capital flows from NIE to less-developed country (LDC), and a corresponding rise in the intermediate good exporting from the vertical multinationals ( MNEs) to subsidiaries in the LDC have important consequences in accounting for the decrease in wage inequality of the NIE. We also show that the relative wage between skilled and unskilled labor increases in the LDC. Moreover, we find that the national income in both countries definitely improves. This result stands in sharp contrast to earlier studies.
產業經濟學國際學術研討會論文集=Proceedings of the 2000 Taipei International Conference on Industrial Economics，頁366-384