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

  • Finn Martensen


    (Department of Economics, University of Konstanz, Germany)

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.

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Paper provided by Department of Economics, University of Konstanz in its series Working Paper Series of the Department of Economics, University of Konstanz with number 2013-16.

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Length: 57 pages
Date of creation: 23 Oct 2013
Date of revision:
Handle: RePEc:knz:dpteco:1316
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