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Wage subsidies and international trade: When does policy coordination pay?

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  • Braun, Sebastian
  • Spielmann, Christian

Abstract

National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, which suggests that there are benefits from international policy coordination. This paper studies the effects of wage subsidies in an international duopoly model with unionised labour markets. The authors document both positive and negative spill-over effects and discuss the benefits and costs from international policy coordination both for the case of symmetric and asymmetric labour market institutions. The results suggest that institutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far. --

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Bibliographic Info

Paper provided by Kiel Institute for the World Economy in its series Economics Discussion Papers with number 2012-9.

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Date of creation: 2012
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Handle: RePEc:zbw:ifwedp:20129

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Keywords: wage subsidies; policy spill-overs; international policy coordination; unionised labour markets; trade; asymmetric labour market institutions;

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References

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  1. Felbermayr, Gabriel & Larch, Mario & Lechthaler, Wolfgang, 2012. "Endogenous labor market institutions in an open economy," Munich Reprints in Economics 20600, University of Munich, Department of Economics.
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Cited by:
  1. Braun, Sebastian & Spielmann, Christian, 2012. "Wage subsidies and international trade: When does policy coordination pay?," Economics Discussion Papers 2012-9, Kiel Institute for the World Economy.

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