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Product Market Integration, Wage Dispersion and Unemployment

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  • Andersen, Torben M.

    (Aarhus University)

Abstract

Even when international product market integration is taking place between fairly similar countries with low labour mobility, it may have important effects for labour markets by increasing the mobility of jobs. This creates both opportunities through exports and threats from imports. Is there any reason why the benefits and costs of product market integration should be unequally distributed across different groups in the labour market? Considering integration as a gradual process lowering trade frictions it is found that there is such a bias in the sense that the gains tend to accrue to the high paid and the loses to the low paid. Product market integration may thus lead to a more inequal distribution of wages and employment, even though there are aggregate gains in terms of higher real incomes and employment.

Suggested Citation

  • Andersen, Torben M., 2001. "Product Market Integration, Wage Dispersion and Unemployment," IZA Discussion Papers 279, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp279
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    References listed on IDEAS

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    Cited by:

    1. Torben Andersen, 2001. "European Integration - A Downward Bias in Employment Policies?," CESifo Working Paper Series 574, CESifo.

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    More about this item

    Keywords

    wage formation; inequality and unemployment; Trade frictions;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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