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Factor Market Linkages in a Global Economy

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  • Oslington, P.

Abstract

This paper considers linkages between national labour markets in a global economy, extending the existing analyses to the empirically important case where factor price equalization does not hold. Removing the assumption of factor price equalization allows the divergent wage experience as well as unemployment experience of Europe and America to be explained. Europe's minimum wage forces it out of the labour intensive industry, leaving it specialised in the skill intensive industry, and with a lower return to skill than America. Under these conditions the entry of labour intensive NICs into world markets pushes down American wages and alters its economic structure (which were unchanged under factor price equalization), and reduces European unemployment (which increased under factor price equalization).

Suggested Citation

  • Oslington, P., 2000. "Factor Market Linkages in a Global Economy," Economics Series Working Papers 9938, University of Oxford, Department of Economics.
    • Handle: RePEc:oxf:wpaper:9938
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    Cited by:

    1. Braun Sebastian, 2010. "Foreign Competition, Multinational Firms, and One-Sided Wage Rigidity," Global Economy Journal, De Gruyter, vol. 10(2), pages 1-30, May.
    2. Nathalie Chusseau & Joël Hellier, 2012. "Globalisation and Inequality: Where do we stand?," Journal of Income Distribution, Ad libros publications inc., vol. 21(3-4), pages 7-34, November.
    3. Hartmut Egger & Frode Meland & Hans-Jörg Schmerer, 2015. "Differences in the degree of unionization as a source of comparative advantage in open economies," Canadian Journal of Economics, Canadian Economics Association, vol. 48(1), pages 245-272, February.
    4. A. B. Atkinson, 2003. "Income Inequality in OECD Countries: Data and Explanations," CESifo Economic Studies, CESifo Group, vol. 49(4), pages 479-513.
    5. Joël Hellier, 2019. "Phases of Globalization, Wages and Inequality," Open Economies Review, Springer, vol. 30(5), pages 905-931, November.
    6. Michael Koch, 2016. "Skills, Tasks and the Scarcity of Talent in a Global Economy," Review of International Economics, Wiley Blackwell, vol. 24(3), pages 536-563, August.
    7. Paul Oslington & Isaac Towers, 2010. "Trade, Migration, and Inequality in a World without Factor Price Equalization," Review of International Economics, Wiley Blackwell, vol. 18(4), pages 650-662, September.
    8. Hartmut Egger & Frode Meland, 2011. "Product and Labor Market Deregulation in Unionized Oligopoly with Asymmetric Countries," CESifo Working Paper Series 3611, CESifo.
    9. Joël Hellier, 2012. "North-South Globalization and Inequality," Working Papers 273, ECINEQ, Society for the Study of Economic Inequality.
    10. Udo Kreickemeier & Douglas Nelson, 2017. "Fair Wages, Unemployment, and Technological Change in a Global Economy," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 8, pages 205-235, World Scientific Publishing Co. Pte. Ltd..
    11. Alfred Sitz & Friedrich Sindermann, 2009. "Unemployment and International Trade: The Effects of Minimum Wages and Non-Traded Goods in Models representing Western Industrialized Countries and China (in German)," FIW Working Paper series 024, FIW.
    12. Sebastian Braun, 2007. "Foreign Competition, Multinational Firms, and the Effects of One-Sided Wage Rigidity," JEPS Working Papers 07-003, JEPS.
    13. Paul Oslington, 2005. "Unemployment and Trade Liberalisation," The World Economy, Wiley Blackwell, vol. 28(8), pages 1139-1155, August.
    14. Hartmut Egger & Peter Egger & James R. Markusen, 2012. "International Welfare And Employment Linkages Arising From Minimum Wages," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(3), pages 771-790, August.
    15. Udo Kreickemeier, 2017. "Unemployment and the Welfare Effects of Trade Policy," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 3, pages 73-94, World Scientific Publishing Co. Pte. Ltd..
    16. Christis G. Tombazos & Xiaokai Yang & Dingsheng Zhang, 2005. "A Neo‐Heckscher–Ohlin Model of Trade with Endogenous Production Patterns," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages 71-81, August.

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    Keywords

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    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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