IDEAS home Printed from
   My bibliography  Save this article

Labor Market Flexibility, International Competitiveness and Patterns of Trade


  • Uzagalieva, Ainura

    () (Center for Economic Research and Graduate Education, Charles University)

  • Cukrowski, Jacek

    () (UNDP Regional Bureau for Europe and CIS Bratislava Regional Centre)


The paper focuses on the question of how labor market regulations can affect a country’s competitive position in international trade and international trade patterns. The analysis shows that differences in labor market flexibility between countries affect their competitive positions in international markets and can serve as independent cause of international trade. it is argued that an increase in labor market flexibility may change the relative price of goods within the country making it more competitive in international markets for the commodities with uncertain demand. changes in relative prices can alter countries’ comparative advantage and thus international trade patterns. furthermore, it is shown that due to the differences in relative prices resulting from different labor market regulations, international trade between countries can be observed even if the countries are identical in all respects (e.g., labor productivity and production technology). data reveal that a country with more a flexible labor market has a comparative advantage in, and tends to export, goods with more variable demand (e.g., fashionable cloths, seasonal toys), while a country with a more rigid labor market has a comparative advantage in, and tends to export, commodities with more stable demand.

Suggested Citation

  • Uzagalieva, Ainura & Cukrowski, Jacek, 2006. "Labor Market Flexibility, International Competitiveness and Patterns of Trade," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 59(2), pages 225-246.
  • Handle: RePEc:ris:ecoint:0086

    Download full text from publisher

    File URL:
    File Function: Full text
    Download Restriction: no

    References listed on IDEAS

    1. Andrew K. Rose, 2000. "One money, one market: the effect of common currencies on trade," Economic Policy, CEPR;CES;MSH, vol. 15(30), pages 7-46, April.
    2. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
    3. Dilip Dutta & Nasiruddin Ahmed, 2004. "An aggregate import demand function for India: a cointegration analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 11(10), pages 607-613.
    4. Kevin C Cheng, 2004. "A Reexamination of Korea’s Trade Flows; What Has Changed and What Explains These Changes?," IMF Working Papers 04/145, International Monetary Fund.
    5. Sergio De Nardis & Claudio Vicarelli, 2003. "The Impact of the Euro on Trade: The (Early) Effect is Not So Large," Economics Working Papers 017, European Network of Economic Policy Research Institutes.
    6. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers Archive 11375, Iowa State University, Department of Economics.
    7. repec:syd:wpaper:2001-3 is not listed on IDEAS
    8. Ronald McKinnon, 2002. "Optimum currency areas and the European experience," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(2), pages 343-364, July.
    9. Houthakker, Hendrik S & Magee, Stephen P, 1969. "Income and Price Elasticities in World Trade," The Review of Economics and Statistics, MIT Press, vol. 51(2), pages 111-125, May.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • F10 - International Economics - - Trade - - - General


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:ecoint:0086. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Angela Procopio). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.