Discussion Paper

No. 2012-9 | January 26, 2012
Wage Subsidies and International Trade: When Does Policy Coordination Pay?


National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, which suggests that there are benefits from international policy coordination. This paper studies the effects of wage subsidies in an international duopoly model with unionised labour markets. The authors document both positive and negative spill-over effects and discuss the benefits and costs from international policy coordination both for the case of symmetric and asymmetric labour market institutions. The results suggest that insti¬tutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far.

JEL Classification

H87 F42 F16 J38

Cite As

Sebastian Braun and Christian Spielmann (2012). Wage Subsidies and International Trade: When Does Policy Coordination Pay?. Economics Discussion Papers, No 2012-9, Kiel Institute for the World Economy. http://www.economics-ejournal.org/economics/discussionpapers/2012-9


Comments and Questions

Anonymous - Referee Report 1
March 02, 2012 - 09:28

see attached file

Anonymous - Referee Report 2
March 06, 2012 - 11:22

see attached file