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Distributional Effects of Commercial Policies in a Small Open Developing Economy Under Imperfect Labor Mobility

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  • Chuhwan Park

    (ETRI)

Abstract

This paper extends the Mussa's model (1982) which shows that the owners of a mobile factor will be interested in securing protection for the industry in which they are employed if the factor is imperfectly substitutable and the interests are especially strong when the degree of mobility is low. By incorporating some important considerations to LDCs, namely, urban nontraded good production and labor market segmentation, this paper shows that there may be a production trap in the urban nontraded good production in which the interests of factor owners in commercial policies may be reversed from those of the Mussa's model under some plausible demand conditions. This paper also shows that the degree of factor mobility may not go in one direction with factor returns, contrary to the major conclusion of the Mussa's model.

Suggested Citation

  • Chuhwan Park, 2001. "Distributional Effects of Commercial Policies in a Small Open Developing Economy Under Imperfect Labor Mobility," Korean Economic Review, Korean Economic Association, vol. 17, pages 99-114.
    • Handle: RePEc:kea:keappr:ker-200106-17-1-06
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    More about this item

    Keywords

    factor mobility; nontraded good production; production trap; labor market segmentations;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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