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Wage subsidies and international trade: When does policy coordination pay?

  • Braun, Sebastian
  • Spielmann, Christian

National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, which suggest that there are benefits from international policy coordination. This paper studies the effects of wage subsidies in an international duopoly model with unionized labour markets. The authors document both positive and negative spill-over effects and discuss the benefits and costs from international policy coordination both for the case of symmetric and asymmetric labour market institutions. The results suggest that institutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far.

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File URL: http://dx.doi.org/10.5018/economics-ejournal.ja.2012-30
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File URL: http://econstor.eu/bitstream/10419/60982/1/720812801.pdf
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Article provided by Kiel Institute for the World Economy in its journal Economics: The Open-Access, Open-Assessment E-Journal.

Volume (Year): 6 (2012)
Issue (Month): ()
Pages: 1-42

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Handle: RePEc:zbw:ifweej:201230
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  1. Hervé Boulhol, 2008. "Unemployment and interactions between trade and labour market institutions," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00261478, HAL.
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  7. Sebastian Braun & Christian Spielmann, 2010. "Wage subsidies and international trade: When does policy coordination pay?," Kiel Working Papers 1599, Kiel Institute for the World Economy.
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