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Labor Market Competitiveness and Poverty

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  • Goto, Hideaki
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    Abstract

    How does labor market competitiveness frame the impact of greater labor productivity and lower inequality on poverty? Specifically, does greater competitiveness increase the impact of higher labor productivity and lower inequality on poverty reduction? In a simple model, we show that there is complementarity between competitiveness and productivity – the greater is one, the larger is the impact of the other. This suggests that improving labor market competitiveness is worthwhile not only for its own sake, but because it improves the transmission mechanism from productivity increases to poverty reduction. We also derive precise conditions under which there is a similar complementarity between equality and competitiveness in poverty reduction.

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    File URL: http://purl.umn.edu/51159
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    Bibliographic Info

    Paper provided by Cornell University, Department of Applied Economics and Management in its series Working Papers with number 51159.

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    Date of creation: 28 Sep 2008
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    Handle: RePEc:ags:cudawp:51159

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    Related research

    Keywords: inequality; labor productivity; market competitiveness; poverty; Food Security and Poverty; International Development; Political Economy; D6; I32; J2; J64;

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    1. Basu, Arnab K. & Chau, Nancy & Kanbur, Ravi, 2007. "A Theory of Employment Guarantees: Contestability, Credibility and Distributional Concerns," IZA Discussion Papers 3002, Institute for the Study of Labor (IZA).
    2. Ann Harrison, 2007. "Globalization and Poverty," NBER Books, National Bureau of Economic Research, Inc, number harr06-1, August.
    3. V. Bhaskar & Ted To, 1996. "Minimum Wages for Ronald McDonald Monopsonies: A Theory of Monopsonistic Competition," Labor and Demography 9603001, EconWPA, revised 21 May 1996.
    4. David Dollar, 2005. "Globalization, Poverty, and Inequality since 1980," World Bank Research Observer, World Bank Group, vol. 20(2), pages 145-175.
    5. Basu, Kaushik, 2005. "Globalization, Poverty and Inequality: What Is the Relationship? What Can Be Done?," Working Papers RP2005/32, World Institute for Development Economic Research (UNU-WIDER).
    6. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
    7. Bhaskar, V. & To, Ted, 2003. "Oligopsony and the distribution of wages," European Economic Review, Elsevier, vol. 47(2), pages 371-399, April.
    8. Douglas O. Staiger & Joanne Spetz & Ciaran S. Phibbs, 2010. "Is There Monopsony in the Labor Market? Evidence from a Natural Experiment," Journal of Labor Economics, University of Chicago Press, vol. 28(2), pages 211-236, 04.
    9. Bhaskar, V. & Manning, A. & To, T., 2002. "Oligopsony and monopsonistic competition in labor markets," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
    10. Sullivan, Daniel, 1989. "Monopsony Power in the Market for Nurses," Journal of Law and Economics, University of Chicago Press, vol. 32(2), pages S135-78, October.
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