Schumpeterian Growth, North-South Trade and Wage Rigidity
AbstractThis 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 InfoArticle provided by De Gruyter in its journal The B.E. Journal of Macroeconomics.
Volume (Year): 4 (2004)
Issue (Month): 1 (October)
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Web page: http://www.degruyter.com
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- 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.
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- 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.
- 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.
- Wolf-Heimo Grieben & Fuat Sener, 2009. "Labor Unions, Globalization, and Mercantilism," CESifo Working Paper Series 2889, CESifo Group Munich.
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