IDEAS home Printed from https://ideas.repec.org/a/taf/applec/v47y2015i6p531-543.html
   My bibliography  Save this article

Trade, labour market rigidity, and aggregate productivity in OECD countries

Author

Listed:
  • Youngho Kang

Abstract

As the economy becomes more open to trade, aggregate productivity can increase by driving out the least productive firms (the selection effect). Since the selection effect reallocates resources toward the more productive firms, this process can be hindered by rigidity in domestic labour market institutions. Based on the selection effect by Melitz (2003), this article empirically examines how rigidity in labour market institutions affects the consequence of trade on aggregate productivity. Findings from panel dynamic ordinary least square (DOLS) estimators suggest that a high degree of labour market rigidity in an open economy reduces Total Factor Productivity (TFP). In particular, in the case of extremely high labour market rigidity but low foreign R&D capital stocks, openness to trade can cause a country to experience decreasing TFP.

Suggested Citation

  • Youngho Kang, 2015. "Trade, labour market rigidity, and aggregate productivity in OECD countries," Applied Economics, Taylor & Francis Journals, vol. 47(6), pages 531-543, February.
    • Handle: RePEc:taf:applec:v:47:y:2015:i:6:p:531-543
    DOI: 10.1080/00036846.2014.975330
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00036846.2014.975330
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/00036846.2014.975330?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rozina Shaheen, 2025. "Labor market consequence of exports diversification and terms of trade shocks in EMDEs," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-23, February.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:applec:v:47:y:2015:i:6:p:531-543. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.