Arbeitspapier

Economic Integration, Wage Policies and Social Policies

This paper uses a two country trade and geography model of monopolistic competition to study the effects of wage policies and social policies on the location of industry. It is first shown that a union wage push in one of two otherwise identical countries induces a relocation of firms which increases with the level of economic integration as measured by trade costs. This 'traditional view' is then contrasted with a 'new economic geography view' in which one of the countries has historically emerged as the core. The agglomeration rent which accrues to the mobile factor gives unions and governments in the core scope to set higher wages and to choose more generous welfare policies than their counterparts in the periphery without having to encounter an exit of firms. The relationship between the maximum international union wage differential and the level of integration is shown to be bell-shaped.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 748

Klassifikation
Wirtschaft
International Investment; Long-term Capital Movements
Size and Spatial Distributions of Regional Economic Activity
Trade and Labor Market Interactions
Economic Integration
International Migration
Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
Thema
integration
wages
industry location
agglomeration
monopolistic competition
Wirtschaftsintegration
Industriestandort
Standorttheorie
Lohnpolitik
Sozialpolitik
Standortwettbewerb
Neue ökonomische Geographie
Monopolistischer Wettbewerb
Theorie

Ereignis
Geistige Schöpfung
(wer)
Pflüger, Michael
Ereignis
Veröffentlichung
(wer)
Institute for the Study of Labor (IZA)
(wo)
Bonn
(wann)
2003

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Pflüger, Michael
  • Institute for the Study of Labor (IZA)

Entstanden

  • 2003

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