Suchergebnisse

AbstractThis paper shows that international capital flow can lead to a rise in the relative wage between skilled and unskilled workers simultaneously in both capital‐exporting and capital‐importing nations. The impossibility of two‐sided wage inequality as an outcome of exogenous shocks has been previously discussed in the literature. We argue that such a result is highly probable when some industries vanish following changes in factor prices as a consequence of factor flows. The asymmetry in the nature of finite changes is the critical factor.

We provide an analysis of enforcement policies applicable to formal sector in dual labor markets. We use a framework with heterogeneous firms, endogenous determination of informal wage and politically dictated enforcement strategies. Firms which operate both in the formal and informal sectors do very little to increase employment when faced with the opportunity of hiring workers in the informal labor market. Thus enforcement of labor laws and other regulations should not have aggregate employment effects, particularly when workers are productively homogeneous. For firms operating exclusively in the informal sector, the outcome is different. Such features determine the stringency of enforcement in a market characterized by firms with varying levels of productivity. For example, in case of firms with relatively high levels of productivity, enforcement has to be stricter than in the case with relatively low productivity firms. Taxing the more productive seems to be the optimal strategy.

This paper seeks to answer if wage subsidy to workers displaced due to trade reform raises welfare in a developing country. We use a general equilibrium model with non-specific factor inputs and trade liberalization as a policy variable. A combination of wage subsidy and tariff rate obtains the second-best welfare level. The theoretical result is new, policy-relevant and important in view of political-economy aspects of free trade in developing and transition countries. Adapted from the source document.