Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
988197 | Structural Change and Economic Dynamics | 2011 | 14 Pages |
Abstract
⺠I analyze the impact of labor standards on long-run accumulation, sectoral distribution, and structural change in a macroeconomic framework. ⺠To do so, I model a small open economy which has two tradable sectors, manufacturing and services. Foreign investment enters the former sector. ⺠Dynamic exercises show that, although higher standards in manufacturing hurt exports and foreign investment in the short run, the long-run effect on this sector is ambiguous. ⺠This is because, given learning-by-exporting, the real exchange rate changes that follow higher standards raise manufacturing profitability. ⺠The short-run impact and the possible lack of sufficient relative price movements, however, make higher standards risky for a low income economy.
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Authors
Arslan Razmi,