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International Product Market Integration, Rents and Wage Formation

  • Andersen, Torben M
  • Sorensen, Allan

International product market integration enhances both export possibilities through easier access to foreign markets, but also the import threat arising from foreign firms penetrating into the domestic market. These mechanisms affect wage formation and employment creation through many channels including product market rents and the possibility that jobs may be relocated across national labour markets. Possibilities and threats, however, will not in general be uniformly distributed across firms and therefore groups in the labour market. These issues are explored in a Ricardian trade model with imperfect competition, heterogeneity in the labour market, and decentralized wage-bargaining. The Paper analyses how product market integration affects wage formation, and identifies characteristics of winners and losers in the integration process.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3995.

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Date of creation: Jul 2003
Date of revision:
Handle: RePEc:cpr:ceprdp:3995
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  1. Bernard, A., 1997. "Exceptional Exporter Performance: Cause, Effect, or Both?," Working papers 97-21, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Donald R. Davis & David E. Weinstein, 1998. "An Account of Global Factor Trade," Harvard Institute of Economic Research Working Papers 1849, Harvard - Institute of Economic Research.
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  14. Jonathan Coppel & Martine Durand, 1999. "Trends in Market Openness," OECD Economics Department Working Papers 221, OECD Publishing.
  15. Andersen, Torben M. & Skaksen , Jan Rose, 2006. "Product Market Integration, Comparative Advantages and Labour Market Performance," Working Papers 08-2004, Copenhagen Business School, Department of Economics.
  16. Phillip Swagel & Matthew J. Slaughter, 1997. "The Effect of Globalization on Wages in the Advanced Economies," IMF Working Papers 97/43, International Monetary Fund.
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  18. R. Dornbusch & S. Fischer & P. A. Samuelson, 1976. "Comparative Advantage, Trade and Payments in a Ricardian Model With a Continuum of Goods," Working papers 178, Massachusetts Institute of Technology (MIT), Department of Economics.
  19. Dowrick, Steve, 1989. "Union-Oligopoly Bargaining," Economic Journal, Royal Economic Society, vol. 99(398), pages 1123-42, December.
  20. Robert Feenstra & Gordon Hanson, 2001. "Global Production Sharing and Rising Inequality: A Survey of Trade and Wages," NBER Working Papers 8372, National Bureau of Economic Research, Inc.
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