Fair wages, unemployment and technological change in a global economy

Kreickemeier, Udo; Nelson, Doug

doi:10.1016/j.jinteco.2005.11.003

Cited by 78 publications

(21 citation statements)

References 27 publications

(37 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Evidence on the magnitude of cross-country di¤erences in labor market institutions is presented in Our analysis builds on a long line of research on trade and labor market frictions. This literature has considered a number of di¤erent sources of labor market frictions, including minimum wages (Brecher 1974), implicit contracts (Matusz 1986), e¢ ciency wages (Copeland 1989), fair wages (Agell andLundborg 1995 andNelson 2006), search and matching frictions Matusz 1988, 1999), and labor immobility and volatility (Cuñat and Melitz 2009). More recently, a surge of research has begun to incorporate labor market frictions Our analysis focuses on search frictions as the source of labor market imperfections and is based squarely in the new view of foreign trade that emphasizes …rm heterogeneity in di¤erentiatedproduct markets.…”

Section: Background and Motivationmentioning

confidence: 99%

Trade and Labor-Market Outcomes

Helpman

Itskhoki

Redding

2013

Advances in Economics and Econometrics

View full text Add to dashboard Cite

This paper reviews a new framework for analyzing the interrelationship between inequality, unemployment, labor market frictions, and foreign trade. This framework emphasizes firm heterogeneity and search and matching frictions in labor markets. It implies that the opening of trade may raise inequality and unemployment, but always raises welfare. Unilateral reductions in labor market frictions increase a country's welfare, can raise or reduce its unemployment rate, yet always hurt the country's trade partner. Unemployment benefits can alleviate the distortions in a country's labor market in some cases but not in others, but they can never implement the constrained Pareto optimal allocation. We characterize the set of optimal policies, which require interventions in product and labor markets.

show abstract

Section: Background and Motivationmentioning

confidence: 99%

Trade and Labor-Market Outcomes

Helpman

Itskhoki

Redding

2013

Advances in Economics and Econometrics

View full text Add to dashboard Cite

show abstract

“…In Brecher (1974) and , for example, unemployment stems from minimum wages; whereas in Copeland (1989) and Davis and Harrigan (2011), efficiency wages play the key role in generating equilibrium unemployment. In Kreickemeier and Nelson (2006), Amiti and Davis (2011), andKreickemeier (2009 & unemployment stems from fair wages.…”

Section: Related Literaturementioning

confidence: 99%

Entrepreneurs, jobs, and trade

Dinopoulos

Unel

2015

European Economic Review

View full text Add to dashboard Cite

“…From the inspection of (17) and (18) note that   is going to be a function of both  and  Writing   as a function of  and  the first order conditions above can be re-written as…”

Section: The Entrepreneur's Problem and Wage Determination Under A Famentioning

confidence: 99%

“…Among related papers, Kreickemeier and Nelson (2006) extend the Akerlof and Yellen (1990) model to a two-sector setting to study the impact of international trade and technology shocks on unemployment and relative wages. 7 The unemployment in their model arises solely from the fair-wage consideration and no search frictions are modeled.…”

Section: Introductionmentioning

confidence: 99%

Fairness, Search Frictions, and Offshoring

Mitra

Ranjan

2013

The B.E. Journal of Economic Analysis &Amp; Policy

View full text Add to dashboard Cite

Fairness considerations are introduced into the determination of wages in a two factor Pissarides-style model of search unemployment to study its implications for the unemployment rates of unskilled and skilled workers in both the closed economy case and when the economy can offshore some inputs. Both fairness concerns and offshoring of jobs done by unskilled workers create the overhiring effect for skilled workers. An increase in the concern for fairness in the closed economy increases the cost of hiring unskilled workers and increases the unemployment rates of both types of workers; however, wage inequality decreases. In the open economy case, an increase in the concern for fairness leads to greater offshoring which prevents skilled unemployment from increasing, but the unemployment of unskilled workers increases. A reduction in the cost of offshoring also increases offshoring and increases the unemployment of unskilled workers, but has a positive effect on skilled workers. Due to the presence of an overhiring effect in the hiring of skilled workers for both offshoring and non-offshoring firms, skilled workers experience higher wages and lower unemployment. The opposite movements in skilled and unskilled unemployment render the net effect ambiguous. Even though wage inequality increases, the impact on the wages of unskilled workers is ambiguous.

show abstract

Fair wages, unemployment and technological change in a global economy

Cited by 78 publications

References 27 publications

Trade and Labor-Market Outcomes

Trade and Labor-Market Outcomes

Entrepreneurs, jobs, and trade

Fairness, Search Frictions, and Offshoring

Contact Info

Product

Resources

About