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Schumpeterian Growth, North-South Trade and Wage Rigidity

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Author Info
Wolf-Heimo Grieben (University of Dortmund)

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Abstract

This paper presents a two-country non-scale Schumpeterian endogenous growth model with interindustry North-South trade and wage rigidity in the North. Its purpose is to analyze the effects of a compression of the wage structure and an increase in unemployment benefits on Northern unskilled unemployment and growth. Both innovation and skill acquisition rates are endogenously determined. We show how the two labor market policies differ with respect to education incentives in a general equilibrium with balanced trade. We further highlight the relevance of North-South trade and incomplete Northern specialization for the labor market effects that we obtain in our model. We demonstrate that the growth effects of a compression of the Northern wage structure depend decisively on the specific formulation of rising R&D difficulty.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal The B.E. Journal of Macroeconomics.

Volume (Year): contributions.4 (2004)
Issue (Month): 1 ()
Pages:
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Handle: RePEc:bpj:bejmac:v:contributions.4:y:2004:i:1:n:9

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Related research
Keywords: Schumpeterian Growth; North-South Trade; Wage Rigidity; Unemployment Benefits;

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Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Wolf-Heimo Grieben, 2006. "Globalization with Labor Market Frictions and Non-Scale Growth," DEGIT Conference Papers c011_053, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
    Other versions:
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