When Does Trade Hurt? Market, Transition and Developing Economies
This paper argues that labor market distortions in transition and developing economies help explain differential impacts of trade liberalization. We assume that workers differ in ability. In a market economy their earnings depend on their ability. However, earnings are independent of ability due to a common wage set in manufacturing in a transition economy and because of family farms in a developing economy. Our work suggests that trade liberalization without structural reform can have serious adverse effects in transition and developing economies: there can even be mutual losses from trade.
|Date of creation:||Jun 2002|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Kala Krishna & Cemile Yavas, 2004.
"Lumpy consumer durables, market power, and endogenous business cycles,"
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- Kala Krishna & Cemile Yavas, 2001. "Lumpy Consumer Durables, Market Power, and Endogenous Business Cycles," NBER Working Papers 8296, National Bureau of Economic Research, Inc.
- Olivier Blanchard & Michael Kremer, 1997. "Disorganization," The Quarterly Journal of Economics, Oxford University Press, vol. 112(4), pages 1091-1126.
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- Kala Krishna & Cemile Yavas, "undated". "Wage Equality in a General Equilibrium Model with Indivisibilities," EPRU Working Paper Series 01-12, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Ng Yew Kwang, 1965. "Why do People Buy Lottery Tickets? Choices Involving Risk and the Indivisibility of Expenditure," Journal of Political Economy, University of Chicago Press, vol. 73, pages 530-530.
- 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.
- Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 88(1), pages 98-116.
- Brecher, Richard A., 1974. "Optimal commercial policy for a minimum-wage economy," Journal of International Economics, Elsevier, vol. 4(2), pages 139-149, May. Full references (including those not matched with items on IDEAS)
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