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Trade liberalization and the Labor Market Revisited

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  • Priniti Panday
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    Abstract

    This paper provides new insights in understanding the adjustments of the labor market to trade liberalization policies in an economy producing tradeables and nontradeables. The results of the paper indicate that the short-run effects of trade liberalization on wages, labor allocation and worker welfare is contingent on certain explicit production and demand conditions that exist in an economy. The production condition is related to the slope of the labor demand curve in a given economy and the demand condition is related to the difference in the cross-price elasticity of demand of nontradeables to the price of importables and exportables. The necessary combination of these conditions needed for trade liberalization to be welfare improving in the short run is explored. Copyright International Atlantic Economic Society 2005

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    File URL: http://hdl.handle.net/10.1007/s11294-005-2278-4
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    Bibliographic Info

    Article provided by Springer in its journal International Advances in Economic Research.

    Volume (Year): 11 (2005)
    Issue (Month): 4 (November)
    Pages: 417-432

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    Handle: RePEc:kap:iaecre:v:11:y:2005:i:4:p:417-432

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    Web page: http://www.springerlink.com/link.asp?id=112112

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    Keywords: F16;

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    1. Njinkeu, Dominique, 1996. "Evaluation of the incentive structure: A survey and application to Cameroon," World Development, Elsevier, vol. 24(3), pages 557-568, March.
    2. Clague, Christopher & Greenaway, David, 1994. "Incidence Theory, Specific Factors and the Augmented Heckscher-Ohlin Model," The Economic Record, The Economic Society of Australia, vol. 70(208), pages 36-43, March.
    3. Neary, J Peter, 1978. "Short-Run Capital Specificity and the Pure Theory of International Trade," Economic Journal, Royal Economic Society, vol. 88(351), pages 488-510, September.
    4. Mayer, Wolfgang, 1974. "Short-Run and Long-Run Equilibrium for a Small Open Economy," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 955-67, Sept./Oct.
    5. Priniti Panday, 2003. "Incidence theory and the shifting of protection across sectors: the South Asian experience," Applied Economics, Taylor & Francis Journals, vol. 35(2), pages 125-132.
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