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Product Market Integration, Wage Dispersion and Unemployment

Author

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  • Andersen, Torben M.

    (Aarhus University)

Abstract

Even when international product market integration is taking place between fairly similar countries with low labour mobility, it may have important effects for labour markets by increasing the mobility of jobs. This creates both opportunities through exports and threats from imports. Is there any reason why the benefits and costs of product market integration should be unequally distributed across different groups in the labour market? Considering integration as a gradual process lowering trade frictions it is found that there is such a bias in the sense that the gains tend to accrue to the high paid and the loses to the low paid. Product market integration may thus lead to a more inequal distribution of wages and employment, even though there are aggregate gains in terms of higher real incomes and employment.

Suggested Citation

  • Andersen, Torben M., 2001. "Product Market Integration, Wage Dispersion and Unemployment," IZA Discussion Papers 279, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp279
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    File URL: https://docs.iza.org/dp279.pdf
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    References listed on IDEAS

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    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
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    3. Torben M. Andersen & Niels Haldrup & Jan Rose Sørensen, 2000. "Labour market implications of EU product market integration," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 15(30), pages 106-133.
    4. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
    5. Davis, Donald R, 1998. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade," American Economic Review, American Economic Association, vol. 88(3), pages 478-494, June.
    6. Dani Rodrik, 1998. "Has Globalization Gone Too Far?," Challenge, Taylor & Francis Journals, vol. 41(2), pages 81-94, March.
    7. Agell, J., 2000. "On the Determinants of Labour Market Institutions: Rent-sharing vs. Social Insurance," Papers 2000:16, Uppsala - Working Paper Series.
    8. Torben M. Andersen & Jan Rose S rense, 2000. "Product Market Integration and Wage Formation," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 15, pages 281-293.
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    Cited by:

    1. Torben Andersen, 2001. "European Integration - A Downward Bias in Employment Policies?," CESifo Working Paper Series 574, CESifo.

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    More about this item

    Keywords

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    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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