24 research outputs found
Product Market Integration, Comparative Advantages and Labour Market Performance
Product Market Integration, Comparative Advantages and
Labour Market Performance*
In a two-country model with trade driven by comparative advantages, it is considered how
imperfectly competitive labour markets are affected by lower frictions in international goods
trade. Easier goods trading is equivalent to increased mobility of employment across
countries and thus a change in the trade-off between wages and employment faced by wage
setters. While the effects of product market integration on the trade-off between wages and
employment in general is ambiguous, it is shown that product market integration works like a
general improvement in productivity via the specialization it allows through trade.
Unambiguously, real wages and employment and welfare improve upon reductions in trade
frictions, and therefore workers are better off irrespective of whether the market power of
unions is enhanced or muted.
JEL Classification: F15, J30, J50
Keywords: trade frictions, wage formation, employment, welfare gain
Product Market Integration, Comparative Advantages and Labour Market Performance
In this paper, we set up a two-country general equilibrium model where trade unions have wage bargaining power. We show that a decrease in trade distortions inducing further product market integration gives rise to specialization gains as well as a labour market reform effect. The implications of the specialization gains are similar to an increase in labour productivity, whereas the labour market reform effect is similar to an increase in the degree of competition in the labour market. Wages, employment and welfare increase as a result of further product market integration. It is interesting to note that the labour market reform effect of product market integration is achieved despite an increase in the wage level.Trade frictions; wage formation; employment; welfare
Does coordination of immigration policies among destination countries increase immigration?
We set up a theoretical model to analyze the implications of coordination of immigration policies among destination countries. The model contains two types of spillovers between destination countries: a terms-of-trade externality and a welfare-policy externality. We show that while coordination unambiguously increases welfare of the destination countries, the effects on the level of immigration and on the income distribution of natives are ambiguous. Thus, coordination among destination countries does not necessarily solve the global coordination problem of inoptimally low levels of migration.coordination, externalities, immigration policy, spillovers, terms of trade, welfare,
Labour Demand, Wage Mark-ups and Product Market Integration
trade frictions, wage formation, employment, welfare gains, F15, J30, J50,