Are US Wages Really Determined by European Labor-Market Institutions?
AbstractThis paper integrates institutionally determined wage rigidities into an otherwise standard Heckscher-Ohlin model of international trade. It accounts for differences in individual productivities and their implications for individual wage incomes and demand for education. Although preserving the factor-price-equalization property of the global equilibrium approach, the model does not support the view expressed by Davis (1998) that global equilibrium links insulate the US labor market from exogenous shocks. It provides a foundation of the derived from comparative studies that do not consistently account for the global general equilibrium links.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1817.
Length: 16 pages
Date of creation: Oct 2005
Date of revision:
Publication status: published in: American Economic Review, 2006, 96 (5), 1924-1930
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Find related papers by JEL classification:
- F11 - International Economics - - Trade - - - Neoclassical Models of Trade
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-05 (All new papers)
- NEP-EDU-2005-11-05 (Education)
- NEP-INT-2005-11-05 (International Trade)
- NEP-LAB-2005-11-05 (Labour Economics)
- NEP-LTV-2005-11-05 (Unemployment, Inequality & Poverty)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Donald R. Davis & Trevor A. Reeve, 1997.
"Human Capital, Unemployment, and Relative Wages in a Global Economy,"
NBER Working Papers
6133, National Bureau of Economic Research, Inc.
- Donald R. Davis & Trevor A. Reeve, 1997. "Human Capital, Unemployment and Relative Wages in a Global Economy," Harvard Institute of Economic Research Working Papers 1804, Harvard - Institute of Economic Research.
- Donald R. Davis & Trevor A. Reeve, 2000. "Human capital, unemployment, and relative wages in a global economy," International Finance Discussion Papers 659, Board of Governors of the Federal Reserve System (U.S.).
- John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1.
- George J. Borjas & Richard B. Friedman & Lawrence F. Katz, 1997. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 1-90.
- Neary, J Peter, 1985. "International Factor Mobility, Minimum Wage Rates, and Factor-Price Equalization: A Synthesis," The Quarterly Journal of Economics, MIT Press, vol. 100(3), pages 551-70, August.
- Davis, Donald R, 1998. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade," American Economic Review, American Economic Association, vol. 88(3), pages 478-94, June.
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