Wage sensitivity rankings and temporal convergence

This paper examines the two-sector general equilibrium model under a variety of labor-market distortions, including minimum wages and factor price differentials (both absolute and proportional). We introduce a new concept - the "wage sensitivity" ranking between sectors - and show that a necessary and sufficient condition for temporal convergence locally is that the physically labor-intensive sector be the wage-sensitive sector.

A hard copy is available in UCD Library at GEN 330.08 IR/UNI