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Does Globalization Lead to a Rat Race of National Labor-Market Institutions?

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  • Peter J. Stauvermann

    () (Department of Economics, Changwon National University, South Korea)

Abstract

Since just around 30 years we observe that the labor’s share of the national income decreases in most countries. In this paper, we introduce an endogenous overlapping generation growth model with an institutional setting of the labor market to show that the changes of the labor-market institutions are one main reason for the decrease of the labor’s share. These changes are mainly caused by the increasing globalization resulting in open capital markets and as a consequence in a competition between countries with respect to the labor-market institutions. In the long run, all will suffer. The only ways to stop this rat race are capital controls or international agreements on the labormarket institutions.

Suggested Citation

  • Peter J. Stauvermann, 2013. "Does Globalization Lead to a Rat Race of National Labor-Market Institutions?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 60(1), pages 73-87, March.
  • Handle: RePEc:voj:journl:v:60:y:2013:i:1:p:73-87
    as

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    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
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    More about this item

    Keywords

    Endogenous growth; Open economies; Labor’s share; Labor market institutions;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F59 - International Economics - - International Relations, National Security, and International Political Economy - - - Other
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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