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Globalization with Labor Market Frictions and Non-Scale Growth

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  • Wolf-Heimo Grieben

Abstract

We analyze the interaction between globalization and labor market frictions in a dynamic general equilibrium North-South non-scale growth model with endogenous Northern innovation and endogenous Southern imitation. The employment, growth and relative-wage effects of globalization are shown to depend qualitatively on the degree of Northern labor market frictions. We demonstrate that Northern countries with particular severe labor market frictions benefit from globalization in terms of employment and growth. We also analyze whether stricter intellectual property rights protection in the South, rising R&D subsidies in the North or an increase in Northern labor market flexibility alleviate or aggravate globalization effects.

Suggested Citation

  • Wolf-Heimo Grieben, 2006. "Globalization with Labor Market Frictions and Non-Scale Growth," DEGIT Conference Papers c011_053, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c011_053
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    Keywords

    Globalization; Quality-Ladder Model; Non-Scale Growth; Frictional Unemployment; Firing Costs;
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