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Effort, trade, and unemployment

Author

Listed:
  • Lutz Altenburg
  • Anke Brenken

Abstract

This paper incorporates equilibrium unemployment caused by efficiency wages into a monopolistic competition model of trade. Worker effort is treated as an endogenous variable that depends on the optimizing behaviour of firms and workers. Opening up trade induces firms to demand greater worker effort and to cut the size of their workforce. This counteracts the positive employment effect due to entry of firms. Circumstances are indicated in which the two effects just balance, leaving aggregate employment unchanged. Trade unambiguously increases worker effort, thereby enhancing within-firm productivity.

Suggested Citation

  • Lutz Altenburg & Anke Brenken, 2008. "Effort, trade, and unemployment," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 864-893, August.
    • Handle: RePEc:cje:issued:v:41:y:2008:i:3:p:864-893
    DOI: 10.1111/j.1540-5982.2008.00489.x
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    Citations

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    Cited by:

    1. Wu Joseph S. K. & Ho Chi Pui, 2017. "The Shapiro-Stiglitz Model with Non-constant Marginal Utility," Open Economics, De Gruyter, vol. 1(1), pages 36-48, August.
    2. Giray Gozgor, 2017. "The Impact of Globalization on the Structural Unemployment: An Empirical Reappraisal," International Economic Journal, Taylor & Francis Journals, vol. 31(4), pages 471-489, October.
    3. Tinh Doan & Son Nguyen & Huong Vu & Tuyen Tran & Steven Lim, 2016. "Does rising import competition harm local firm productivity in less advanced economies? Evidence from the Vietnam's manufacturing sector," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(1), pages 23-46, February.
    4. Kamei, Keita, 2014. "International Trade, Unemployment, and Firm Owners in a General Equilibrium with Oligopoly," MPRA Paper 59388, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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