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Unemployment and relative labor market institutions between trading partners

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  • Hervé Boulhol

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, OCDE - Organisation de Coopération et de Développement Economiques = Organisation for Economic Co-operation and Development)

Abstract

This paper contributes to the literature that highlights the role of trading partners' institutions for a country's unemployment rate. The objective is to study whether the results established in the minimum wage setting of Davis (1998) hold when unemployment is driven by search frictions. This paper finds that relative labor market institutions matter for equilibrium unemployment as they generate comparative advantages, but there are two main differences with Davis. With North-North trade, unemployment decreases in the low-regulation country. When South is brought into the picture, low-regulation North is not insulated, and unemployment increases in both developed countries as a result of specialization.

Suggested Citation

  • Hervé Boulhol, 2010. "Unemployment and relative labor market institutions between trading partners," Post-Print halshs-00544010, HAL.
    • Handle: RePEc:hal:journl:halshs-00544010
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00544010
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    References listed on IDEAS

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