| Impact of Capital Market Integration on Skilled-Unskilled Labor Choice |
Hikaru Ogawa, Masafumi Tsubuku |
University of Tokyo, Tokyo, Japan
Nagoya University, Nagoya, Japan |
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Corresponding Author:
Masafumi Tsubuku ,Tel: +81527894926, Fax: +81527894924, Email: msfm.tbk@gmail.com |
| Copyright ©2017 The Journal of Economic Integration |
| ABSTRACT |
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This study examines how capital market integration, induced by globalization, affects skilled-unskilled labor choices. Our results show that market integration fosters competition for mobile capital among countries, inducing governments to employ domestic policies that are favorable for skilled workers. These policy changes induce individuals to become skilled workers, thereby raising the skilled-unskilled labor ratio. We examine the efficiency of the aforementioned ratio in integrated markets and show that the supply of skilled (unskilled) labor in equilibrium is excessive (deficient) because education in one country might create negative externalities in others.
JEL Classification
H21: Efficiency; Optimal Taxation
H77: Intergovernmental Relations; Federalism; Secession |
| Keywords:
Capital Tax Competition | Skilled Labor | Unskilled Labor | Market Integration
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