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Effort, trade, and unemployment

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  • Lutz Altenburg
  • Anke Brenken

Abstract

. This paper incorporates equilibrium unemployment caused by efficiency wages into a monopolistic competition model of trade. Worker effort is treated as an endogenous variable that depends on the optimizing behaviour of firms and workers. Opening up trade induces firms to demand greater worker effort and to cut the size of their workforce. This counteracts the positive employment effect due to entry of firms. Circumstances are indicated in which the two effects just balance, leaving aggregate employment unchanged. Trade unambiguously increases worker effort, thereby enhancing within‐firm productivity. Ce mémoire incorpore le chômage d'équilibre causé par les salaires d'efficience dans un modèle de commerce international avec concurrence monopolistique. L'effort du travailleur est considéré comme une variable endogène qui dépend du comportement d'optimisation des entreprises et des travailleurs. Une libéralisation du commerce amène les entreprises à demander un plus grand effort aux travailleurs et à réduire la taille de leur main‐d'uvre. Cela fait contrepoids à l'effet d'emploi positif attribuable à l'entrée de nouvelles firmes. On définit les circonstances dans lesquelles ces deux effets s'équilibrent et laissent le niveau de chômage inchangé. Très clairement, la libéralisation du commerce accroît l'effort des travailleurs, et en conséquence augmente la productivité intra‐firme.

Suggested Citation

  • Lutz Altenburg & Anke Brenken, 2008. "Effort, trade, and unemployment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(3), pages 864-893, August.
    • Handle: RePEc:wly:canjec:v:41:y:2008:i:3:p:864-893
    DOI: 10.1111/j.1540-5982.2008.00489.x
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    References listed on IDEAS

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    Cited by:

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    3. Tinh Doan & Son Nguyen & Huong Vu & Tuyen Tran & Steven Lim, 2016. "Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam's manufacturing sector," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(1), pages 23-46, February.
    4. Kamei, Keita, 2014. "International Trade, Unemployment, and Firm Owners in a General Equilibrium with Oligopoly," MPRA Paper 59388, University Library of Munich, Germany.

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