Domestic labor, foreign capital and national welfare
The competitive allocation of labor across different sectors of an economy may not be socially optimal when one sector uses foreign capital. We argue that a suitably designed government intervention is required to restrict the sectors to their optimal size and maximize national welfare. Such a policy internalizes the possibility of repatriation and reinvestment. We demonstrate the optimality of a minimum wage regulation.
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"Labor market aspects of enclave-led growth,"
Discussion Papers, Series II
179, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
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"Foreign Capital and Protectionism,"
RCER Working Papers
310, University of Rochester - Center for Economic Research (RCER).
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