TY  - JOUR
AU  - Beaudry,Paul
AU  - Collard,Fabrice
TI  - Globalization, Returns to Accumulationa and the World Distribution of Output
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10565
PY  - 2004
Y2  - June 2004
UR  - http://www.nber.org/papers/w10565
L1  - http://www.nber.org/papers/w10565.pdf
N1  - Author contact info:
Paul Beaudry
Department of Economics
University of British Columbia
Vancouver, Canada
Tel: 604/822-8624
Fax: 604/822-5915
E-Mail: paulbe@interchange.ubc.ca

Fabrice Collard
University of Toulouse
Manufacture des Tabacs
21 Allee de Brienne
31000 Toulouse, France
E-Mail: fabrice.collard@univ-tlse1.fr
AB  - This paper examines the extent to which the process of globalization can explain the observed widening in the cross--country distribution of output--per--worker. In particular examine whether the opening up of trade in a Hecksher--Ohlin type model of trade can explain the observed changes. On the theoretical front the model highlights that, when the labor market is subject to a holdup problem, then the opening up of trade can cause an increase in the dispersion of income across countries similar to that observed in the data due to the emergence of a discrepancy between the private and social returns to capital accumulation that favors capital abundant countries. On the empirical front, we document the relevance of the model by examining whether growth patterns, decomposition exercises and specialization patterns support the model's predictions. Overall we find that over 50% of the recently observed increase in income dispersion across countries can be accounted for by the mechanism exemplified by the model.
ER  -