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Globalization, Labor Market Rigidities and Multiple Equilibria

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  • Wolf-Heimo GRIEBEN

Abstract

This paper analyses the effects of globalization, stricter intellectual property rights protection and different labor market policies in a dynamic North-South general equilibrium model with non-scale growth. To this aim, we generalize the Schumpeterian product-lifecycle model of Dinopoulos and Segerstrtom (2003) by adding frictional unemployment and firing costs to their framework. We find that the effects on North-South wage inequality, employment and growth depend qualitatively on the level of Northern firing costs. Contrary to the special case of perfect labor market flexibility studied by Dinopoulos and Segerstrom, globalization may not benefit anymore both the South in terms of a relative-wage catch up and the North in terms of a temporary innovation and growth push.

Suggested Citation

  • Wolf-Heimo GRIEBEN, 2004. "Globalization, Labor Market Rigidities and Multiple Equilibria," DEGIT Conference Papers c009_020, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c009_020
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    File URL: http://degit.sam.sdu.dk/papers/degit_09/C009_020.pdf
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    References listed on IDEAS

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    7. Alan V. Deardorff, 2011. "What Might Globalisation's Critics Believe?," World Scientific Book Chapters, in: Robert M Stern (ed.), Comparative Advantage, Growth, And The Gains From Trade And Globalization A Festschrift in Honor of Alan V Deardorff, chapter 30, pages 371-390, World Scientific Publishing Co. Pte. Ltd..
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    Cited by:

    1. Federico Etro, 2006. "Political geography," Public Choice, Springer, vol. 127(3), pages 321-343, June.

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    More about this item

    Keywords

    Economic Growth; North-South Trade; Globalization; Frictional Unemployment; Firing Costs;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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