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Do Labor Rents Justify Strategic Trade and Industrial Policy?

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  • William T. Dickens

Abstract

Several efficiency wage theories of wage determination have the property that identical workers are more productive in high wage industries and that the promotion of employment in high wage industries can increase GDP (and some measures of welfare). I argue that while policies to favor high wage industries may increase productivity, the effects in developed economies are likely to be very small. This is mainly because the workers who fill the high wage vacancies will come from fairly high wage jobs.

Suggested Citation

  • William T. Dickens, 1995. "Do Labor Rents Justify Strategic Trade and Industrial Policy?," NBER Working Papers 5137, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:5137
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    References listed on IDEAS

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    Cited by:

    1. Oliver J. Blanchard, 1997. "The Medium Run," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 89-158.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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