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Does high labour mobility always promote trade liberalization?

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  • Daiki Kishishita

Abstract

Labour immobility (high adjustment cost) has been regarded as a major obstacle to trade liberalization and it has been argued that higher labour mobility promotes trade liberalization. However, this is not the case when we take into account conflicts of interest between politicians and voters that are inevitable in representative democracy. I construct a simple two‐period model including both elections and sectoral adjustment. Then I show that the non‐monotonic relationship between labour mobility and the equilibrium degree of trade liberalization exists due to the principal–agent relationship. In representative democracy, higher labour mobility prevents trade liberalization in some cases. Une mobilité élevée de la main‐d'œ uvre est‐elle toujours synonyme de libéralisation des échanges? L'immobilité des travailleurs (coûts d'ajustement élevés) est considérée comme un obstacle majeur à la libéralisation des échanges tandis qu'une mobilité de la main‐d'œ uvre plus élevée est supposée la stimuler. Cependant, ce n'est pas toujours le cas si l'on tient compte des conflits d'intérêts inévitables entre élus et électeurs au sein des démocraties représentatives. J'ai élaboré un modèle simple à deux périodes tenant à la fois compte des ajustements sectoriels et de ceux liés aux élections. J'ai ensuite montré que la relation non monotonique entre la mobilité de la main‐d'œ uvre et le degré d'équilibre de libéralisation des échanges existe en vertu de l'entente mandant‐mandataire. Dans les démocraties représentatives, une mobilité élevée de la main‐d'œ uvre peut, dans certains cas, empêcher la libéralisation des échanges.

Suggested Citation

  • Daiki Kishishita, 2019. "Does high labour mobility always promote trade liberalization?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(3), pages 1223-1247, August.
  • Handle: RePEc:wly:canjec:v:52:y:2019:i:3:p:1223-1247
    DOI: 10.1111/caje.12402
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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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