Article ID Journal Published Year Pages File Type
963270 Journal of International Economics 2006 19 Pages PDF
Abstract
This paper analyzes the effects of global and national technological change on employment and relative wages in an integrated two-country world (“Europe” and “America”), where both countries are characterized by equilibrium unemployment due to fair wage constraints. The asymmetry between the countries arises from country-specific preferences towards wage inequality, with Europe's preferences being more egalitarian. Furthermore, we look at integration between this two-country world and a third country (“low-wage south”). We derive an analytical tool, the Virtual Integrated Equilibrium, that allows us to adapt Dixit and Norman's Integrated Equilibrium approach to a situation where both countries have endogenous unemployment levels.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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