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Fair Wages, Unemployment, and Technological Change in a Global Economy

In: International Trade and Labor Markets Welfare, Inequality and Unemployment

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  • Udo Kreickemeier
  • Douglas Nelson

Abstract

This chapter analyzes the effects of global and national technological change on employment and relative wages in an integrated two-country world (“Europe” and “America”), where both countries are characterized by equilibrium unemployment due to fair wage constraints. The asymmetry between the countries arises from country-specific preferences towards wage inequality, with Europe’s preferences being more egalitarian. Furthermore, we look at integration between this two-country world and a third country (“low wage sout”). We derive an analytical tool, the Virtual Integrated Equilibrium, that allows us to adapt Dixit and Norman’s Integrated Equilibrium approach to a situation where both countries have endogenous unemployment levels.

Suggested Citation

  • 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..
    • Handle: RePEc:wsi:wschap:9789813224919_0008
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    More about this item

    Keywords

    International Trade; Inequality; Labor Markets; Unemployment; Offshoring;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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