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Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects

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  • Finn Martensen

    () (Department of Economics, University of Konstanz, Germany)

Abstract

In a North-South product-cycle model, I study the short- and long-run effects on Northern unemployment of (i) trade liberalization, (ii) tighter international patent protection, and (iii) Southern market expansion. Besides production workers, I also consider R&D workers, which is new to the literature on short-run effects. In the short run, R&D workers are affected before production workers in case of trade liberalization and tighter international patent protection. Unilateral Northern trade liberalization increases unemployment in the short and long run, while Southern trade liberalization has stronger opposite effects. Surprisingly, tighter international patent protection yields a short-run unemployment increase, although it decreases unemployment in the long run. An expansion of the Southern market yields a short- and long-run decrease in unemployment.

Suggested Citation

  • Finn Martensen, 2013. "Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects," Working Paper Series of the Department of Economics, University of Konstanz 2013-16, Department of Economics, University of Konstanz.
  • Handle: RePEc:knz:dpteco:1316
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    References listed on IDEAS

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    More about this item

    Keywords

    Product Cycles; Globalization; Trade Liberalization; International Patent Protection; Unemployment;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • F66 - International Economics - - Economic Impacts of Globalization - - - Labor

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