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Wage Subsidy and Sector-Specific Unemployment: A New Economic Geography Approach

  • Yenhuang Chen

    ()

    (Chinese Culture University)

  • Lihong Zhao

    ()

    (China HuanQiu Contracting & Engineering Corporation)

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    This paper uses a new economic geography approach to examine the effects of wage subsidy, which is undertake to bolster up the industrial development. This paper also highlights the effects of trade liberalization and international capital mobility. In particular, sector-specific unemployment is introduced in the monopolistically competitive sector of the home country.

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    File URL: http://www.accessecon.com/Pubs/EB/2009/Volume29/EB-09-V29-I1-P44.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 29 (2009)
    Issue (Month): 1 ()
    Pages: 426-436

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    Handle: RePEc:ebl:ecbull:eb-08f20004
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    1. Anthony J. Venables, 1993. "Equilibrium Locations of Vertically Linked Industries," CEP Discussion Papers dp0137, Centre for Economic Performance, LSE.
    2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    3. Krugman, Paul & Venables, Anthony J, 1994. "Globalization and the Inequality of Nations," CEPR Discussion Papers 1015, C.E.P.R. Discussion Papers.
    4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    5. Forslid, Rikard & Midelfart, Karen Helene, 2005. "Internationalisation, industrial policy and clusters," Journal of International Economics, Elsevier, vol. 66(1), pages 197-213, May.
    6. Tharakan, P. K. M., 1984. "Intra-industry trade between the industrial countries and the developing world," European Economic Review, Elsevier, vol. 26(1-2), pages 213-227.
    7. Harris, John R & Todaro, Michael P, 1970. "Migration, Unemployment & Development: A Two-Sector Analysis," American Economic Review, American Economic Association, vol. 60(1), pages 126-42, March.
    8. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December.
    9. Neary, Peter, 1988. "Stability of the Mobile-Capital Harris-Todaro Model: Some Further Results," Economica, London School of Economics and Political Science, vol. 55(217), pages 123-27, February.
    10. R. D. Husby, 1993. "The Minimum Wage, Wage Subsidies, And Poverty," Contemporary Economic Policy, Western Economic Association International, vol. 11(3), pages 30-38, 07.
    11. Neary, J Peter, 1981. "On the Harris-Todaro Model with Intersectoral Capital Mobility," Economica, London School of Economics and Political Science, vol. 48(191), pages 219-34, August.
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