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Schumpeterian Growth, North-South Trade and Wage Rigidity

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  • Wolf-Heimo Grieben

    (University of Dortmund)

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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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.

Volume (Year): contributions.4 (2004)
Issue (Month): 1 ()
Pages: 9

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Handle: RePEc:bpj:bejmac:v:contributions.4:y:2004:i:1:n:9

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Web page: http://www.degruyter.com

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Related research

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

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Cited by:
  1. Wolf-Heimo Grieben & Fuat Sener, 2012. "North-South Trade, Unemployment and Growth: What’s the Role of Labor Unions?," Working Paper Series of the Department of Economics, University of Konstanz 2012-06, Department of Economics, University of Konstanz.
  2. Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.
  3. Wolf-Heimo Grieben, 2006. "Globalization with labor market frictions and non-scale growth," Working Papers of the Research Group Heterogenous Labor 06-09, Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim.
  4. Grieben, Wolf-Heimo & Sener, Fuat, 2009. "Globalization, rent protection institutions, and going alone in freeing trade," European Economic Review, Elsevier, vol. 53(8), pages 1042-1065, November.

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