Arnold, Lutz G. (2002) On the growth effects of North-South trade: the role of labor market flexibility. JOURNAL OF INTERNATIONAL ECONOMICS, 58 (2). pp. 451-466. ISSN 0022-1996
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This paper examines the impact of intensified North-South intra-industry trade from a growth theoretic perspective. It incorporates unemployment into Helpman's [Econometrica 61 (1993) 1247] model of North-South trade. We assume that those Northern workers who lose their jobs due to imitation remain unemployed for a given (expected) length of time, so that imitation in the South causes frictional unemployment. It is shown that the shape of the relation between the (exogenous) rate of imitation and the (endogenous) steady-state growth rate depends on the degree of labor market flexibility, as measured by the outflow rate from unemployment. It is monotonically increasing for high outflow rates, hump-shaped for intermediate outflow rates, and monotonically decreasing for low outflow rates. The realization of the potential growth gains from trade thus presupposes labor market flexibility, and the model is capable of accounting qualitatively for the divergent growth performances in the US and Europe in the recent past. (C) 2002 Elsevier Science B.V. All rights reserved.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | ENDOGENOUS TECHNOLOGICAL-CHANGE; UNEMPLOYMENT; STABILITY; IMITATION; MODELS; North-South trade; endogenous growth; labor market flexibility |
| Subjects: | 300 Social sciences > 330 Economics |
| Divisions: | Business, Economics and Information Systems > Institut für Volkswirtschaftslehre und Ökonometrie > Lehrstuhl für Theoretische Volkswirtschaft (Prof. Dr. Lutz Arnold) |
| Depositing User: | Dr. Gernot Deinzer |
| Date Deposited: | 25 Aug 2021 12:18 |
| Last Modified: | 25 Aug 2021 12:18 |
| URI: | https://pred.uni-regensburg.de/id/eprint/39630 |
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