Product Market Integration, Comparative Advantages and Labour Market Performance

OPEN ARCHIVE

Union Jack
Dannebrog

Product Market Integration, Comparative Advantages and Labour Market Performance

Show full item record

Title: Product Market Integration, Comparative Advantages and Labour Market Performance
Author: Andersen, Torben M.; Skaksen, Jan Rose
Abstract: 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 gains
URI: http://hdl.handle.net/10398/7506
Date: 2004-01-23

Creative Commons License This work is licensed under a Creative Commons License.

Files Size Format View
dp698.pdf 414.7Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record