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Trade, Labour Force Growth and Wages


  • Francois, Joseph F


This paper explores the transmission of demographic pressure between open economies. The implications of labor force growth for wages, employment, and production patterns are formally examined. These issues are explored theoretically in a formal dual trade model incorporating features of both standard factor-based trade models and models of two-way trade based on product differentiation and returns to specialization. Sufficient conditions for positive trade linkages between labor force growth in one region and real wage erosion in another are derived. These conditions are then examined numerically in the context of projected non-OECD labor force growth. Copyright 1996 by Royal Economic Society.

Suggested Citation

  • Francois, Joseph F, 1996. "Trade, Labour Force Growth and Wages," Economic Journal, Royal Economic Society, vol. 106(439), pages 1586-1609, November.
  • Handle: RePEc:ecj:econjl:v:106:y:1996:i:439:p:1586-1609

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    References listed on IDEAS

    1. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    2. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    3. Romer, Paul M, 1990. "Are Nonconvexities Important for Understanding Growth?," American Economic Review, American Economic Association, vol. 80(2), pages 97-103, May.
    4. Abramovitz, Moses, 1986. "Catching Up, Forging Ahead, and Falling Behind," The Journal of Economic History, Cambridge University Press, vol. 46(02), pages 385-406, June.
    5. Nelson, Charles R. & Plosser, Charles I., 1982. "Trends and random walks in macroeconmic time series : Some evidence and implications," Journal of Monetary Economics, Elsevier, vol. 10(2), pages 139-162.
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    Cited by:

    1. De Loo, Ivo & Ziesemer, Thomas, 1998. "Determinants Of Sectoral Average Wage Growth Rates in a Specific Factors Model with International Capital Movements: The Case of Cobb-Douglas Production Functions," Research Memorandum 006, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    2. Keshab Bhattarai, 2016. "Growth and Income Distributions in Four EU Economies," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 22(3), pages 263-277, August.
    3. De Loo, Ivo & Ziesemer, Thomas, 1999. "Determinants Of Sectoral Average Wage and Employment Growth Rates in a Specific Factors Model with Production Externalities and International Capital Movements," Research Memorandum 006, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    4. Keshab Raj BHATTARAI, "undated". "Dynamic Multi-Household General Economic Models for Policy Simulations: France, Germany, Spain and UK," EcoMod2009 21500014, EcoMod.

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