Is a Skill Intensity Reversal a Mere Theoretical Curiosum? Evidence from the U.S. and Mexico

A rising skill premium in two countries can be explained by the Heckscher-Ohlin model assuming a "skill intensity reversal." This assumption, however, poses an empirical challenge since past research has found little evidence for the so-called "factor intensity reversal." We now show clear-cut evidence for the existence of a skill intensity reversal.

Variety-Skill Complementarity: A Simple Resolution of the Trade-Wage Inequality Anomaly

The Stolper-Samuelson theorem predicts that the relative wage of high-skilled to low-skilled labor will increase in the high-skill abundant U.S. but decrease in low-skill abundant Mexico after trade liberalization, while it actually began to rise in both countries in the late 1980s. We present a simple resolution of this "trade-wage inequality anomaly" in a model of variety trade. Variety trade increases the variety of intermediate goods used by the final good. If the varieties and high-skilled labor are complements, the skill premium rises in both countries. This linking of imports of new foreign varieties?---the extensive margin?---to wage inequality is compatible with evidence. Our numerical examples illustrate that small amounts of variety trade can produce a signi?ficant increase in relative wage.

Milnor-Selberg zeta functions and zeta regularizations

By a similar idea for the construction of Milnor's gamma functions, we introduce "higher depth determinants" of the Laplacian on a compact Riemann surface of genus greater than one. We prove that, as a generalization of the determinant expression of the Selberg zeta function, this higher depth determinant can be expressed as a product of multiple gamma functions and what we call a Milnor-Selberg zeta function. It is shown that the Milnor-Selberg zeta function admits an analytic continuation, a functional equation and, remarkably, has an Euler product.Comment: 32 pages, 7 figure

Fixed Cost, Number of Firms, and Skill Premium: An Alternative Source for Rising Wage Inequality

The number of firms and the wage inequality increased in U.S. manufacturing industries after the late 1970s and early 1980s, when the so-called "Carter/Reagan deregulation" was implemented. This paper provides a possible theoretical explanation for this observed relationship between the number of firms and the wage inequality on the basis of fixed cost. By modifying a variety model, we show that lowering the fixed cost of entry increases the variety of inputs used by the final good. The skill premium then rises through variety-skill complementarity. Our model also shows that the size of a firm decreases and the real wage of low-skilled labor does not necessarily decline, which are compatible with U.S. observations.Fixed cost; The number of firms; Skill premium; Variety-skill complementarity

Determinants of EDI (Electronic Data Interchange) Adoption and Integration in the US and Japanese Automobile Suppliers

This paper examines determinants of EDI adoption and integration in the US and Japanese automobile suppliers. The paper constructs several hypotheses based on the transaction-cost and resource- dependence approaches, and tests these hypotheses by using data from the automobile suppliers. Our study shows: (1) the resource-dependence approach seemed more effective in explaining EDI adoption, while the transaction-cost approach seemed more effective in explaining EDI integration; (2) the transaction-cost approach seemed more suited to the US context, while the resource-dependence approach seemed more suited to the Japanese context; (3) EDI adoption and EDI integration had positive impacts on EDI performance in the US, suggesting the higher validity of our framework in the US.Electronic Data Interchange (EDI), Business-to-Business Electronic Commerce, Automotive Industry, Automobile Suppliers, Technology Adoption