Skill acquisition, credit constraints, and trade

Tatyana Chesnokova*, Kala Krishna

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)


In this paper we develop a general equilibrium model where credit constraints limit the ability of agents with heterogeneous abilities and wealth to acquire skills. We identify a new effect, the induced Rybczynski effect, that works in the opposite direction from the normal supply response and may result in relative supply being downward-sloping. We analyze the effects of trade and show that under some conditions trade may reduce welfare. Finally, we study the effects of trade on income distribution and inequality.

Original languageEnglish
Pages (from-to)227-238
Number of pages12
JournalInternational Review of Economics and Finance
Issue number2
Publication statusPublished - 2009 Mar
Externally publishedYes


  • Credit constraint
  • Skill formation

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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