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WTO Working Papers

WTO working papers usually represent research in progress. Such research may be conducted in the preparation of WTO Secretariat reports, studies or other material for WTO members. The papers are circulated for comment because the WTO considers critical review of professional research to be extremely important.

English

ICT, Access to Services and Wage Inequality

This paper discusses how information and communication technology (ICT) affects the quality and reach of consumer services. These services need to be provided locally, but consist of several components, some of which can be digitised and transmitted over long distances. A general equilibrium model is developed and numerical simulations in a stylised two-factor, two-region, centre-periphery setting are presented. Trade in intermediate services improves the quality of consumer services enormously in the periphery, but may reduce the quality at the centre. Trade in intermediate services also has a dramatic impact on skilled workers’ wages in the periphery, both relative to unskilled workers in their own region and relative to skilled workers at the centre and leads to a more equal distribution of income both between the centre and the periphery and within the periphery.

English

Keywords: income distribution, Trade in services, ICT, transaction costs
JEL: D23: Microeconomics / Production and Organizations / Organizational Behavior; Transaction Costs; Property Rights; R13: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / General Equilibrium and Welfare Economic Analysis of Regional Economies; F13: International Economics / Trade / Trade Policy; International Trade Organizations; R12: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Size and Spatial Distributions of Regional Economic Activity; F12: International Economics / Trade / Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
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