Economic Integration, Factor Mobility, and Wage Convergence
AbstractThis paper studies the effect of economic integrationof two regions on the mobility of skilled and unskilled workersacross regions and on the resulting location of industrial activity.In particular, we study what happens when wages in both regionsare set by the unions of the ‘West’—the region with agreater initial relative stock of human capital. We show thatunder some circumstances, it is the interest of the West's unionsto set up a speed of wage convergence greater than equilibrium,thus generating unemployment in the East. This slows the migrationof human capital toward the East, but quickens the migrationof raw labor toward the West. A greater share of economic activityis eventually located in the Western region. Unions in the Westwill benefit from this provided human capital has low migrationcosts relative to raw labor. Copyright Kluwer Academic Publishers 1997
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 4 (1997)
Issue (Month): 3 (July)
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Web page: http://www.springerlink.com/link.asp?id=102915
Other versions of this item:
- Saint-Paul, G., 1997. "Economic Integration, Factor Mobility, and Wage Convergence," DELTA Working Papers 97-01, DELTA (Ecole normale supérieure).
- Saint-Paul, Gilles, 1997. "Economic Integration, Factor Mobility, and Wage Convergence," CEPR Discussion Papers 1597, C.E.P.R. Discussion Papers.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
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