Domestic labor, foreign capital and national welfare
AbstractThe competitive allocation of labor across different sectors of an economy may not be socially optimal when one sector uses foreign capital. We argue that a suitably designed government intervention is required to restrict the sectors to their optimal size and maximize national welfare. Such a policy internalizes the possibility of repatriation and reinvestment. We demonstrate the optimality of a minimum wage regulation. --
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Bibliographic InfoPaper provided by Dresden University of Technology, Faculty of Business and Economics, Department of Economics in its series Dresden Discussion Paper Series in Economics with number 12/04.
Date of creation: 2004
Date of revision:
Foreign capital; factor mobility; national welfare; targeting;
Find related papers by JEL classification:
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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