Journal Article

No. 2012-30 | August 02, 2012
Wage Subsidies and International Trade: When Does Policy Coordination Pay? PDF Icon

Abstract

National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, which suggest that there are benefits from international policy coordination. This paper studies the effects of wage subsidies in an international duopoly model with unionized 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 institutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far.

JEL Classification

F16 F42 H87 J38

Citation

Sebastian Braun and Christian Spielmann (2012). Wage Subsidies and International Trade: When Does Policy Coordination Pay?. Economics: The Open-Access, Open-Assessment E-Journal, 6 (2012-30): 1—42. http://dx.doi.org/10.5018/economics-ejournal.ja.2012-30

Assessment

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