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Globalization and the Inequality-Unemployment Tradeoff

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  • Joël Hellier
  • Nathalie Chusseau

Abstract

Over the last 20 years, advanced economies have experienced an "unemployment versus inequality" tradeoff that is critically uneven across countries. To explain this, we propose an extended HOS model in which: the factors are skilled and unskilled labor; there is a continuum of goods; the world comprises two North countries (one egalitarian and one nonegalitarian) and the South; there is no factor price equalization; globalization consists in the South cornering a growing share of world production. In the North, globalization entails an inequality-unemployment tradeoff and the adjustment to globalization is more painful for the country that was initially inequality-oriented. Copyright © 2010 Blackwell Publishing Ltd.

Suggested Citation

  • Joël Hellier & Nathalie Chusseau, 2010. "Globalization and the Inequality-Unemployment Tradeoff," Review of International Economics, Wiley Blackwell, vol. 18(5), pages 1028-1043, November.
  • Handle: RePEc:bla:reviec:v:18:y:2010:i:5:p:1028-1043
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Nathalie Chusseau & Joël Hellier, 2012. "Inequality in Emerging Countries," Working Papers hal-00993411, HAL.
    2. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2015. "Offshoring and Labour Market Reforms: Modelling the German Experience," IZA Discussion Papers 8920, Institute for the Study of Labor (IZA).
    3. Joël Hellier, 2012. "The North-South HOS Model, inequality and globalization," Working Papers 244, ECINEQ, Society for the Study of Economic Inequality.
    4. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Journal of Income Distribution, vol. 21(3-4), pages 7-34, November.
    5. Stephanie Meinhard & Niklas Potrafke, 2012. "The Globalization–Welfare State Nexus Reconsidered," Review of International Economics, Wiley Blackwell, vol. 20(2), pages 271-287, May.
    6. Marika Karanassou & Hector Sala, 2012. "Inequality and Employment Sensitivities to the Falling Labour Share," The Economic and Social Review, Economic and Social Studies, vol. 43(3), pages 343-376.
    7. Beissinger, Thomas & Chusseau, Nathalie & Hellier, Joël, 2016. "Offshoring and labour market reforms in Germany: Assessment and policy implications," Economic Modelling, Elsevier, vol. 53(C), pages 314-333.
    8. Nathalie Chusseau & Joel Hellier, 2014. "Globalization and social segmentation," Working Papers 339, ECINEQ, Society for the Study of Economic Inequality.
    9. Thomas Beissinger & Nathalie Chusseau & Joel Hellier, 2014. "Offshoring, employment, labour market reform and inequality: Modelling the German experience," Working Papers 330, ECINEQ, Society for the Study of Economic Inequality.
    10. Joël Hellier, 2012. "North-South Globalization and Inequality," Working Papers 273, ECINEQ, Society for the Study of Economic Inequality.

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