Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects

Finn Martensen

No 2013-16, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: In a North-South product-cycle model, I study the short- and long-run effects on Northern unemployment of (i) trade liberalization, (ii) tighter international patent protection, and (iii) Southern market expansion. Besides production workers, I also consider R&D workers, which is new to the literature on short-run effects. In the short run, R&D workers are affected before production workers in case of trade liberalization and tighter international patent protection. Unilateral Northern trade liberalization increases unemployment in the short and long run, while Southern trade liberalization has stronger opposite effects. Surprisingly, tighter international patent protection yields a short-run unemployment increase, although it decreases unemployment in the long run. An expansion of the Southern market yields a short- and long-run decrease in unemployment.

Keywords: Product Cycles; Globalization; Trade Liberalization; International Patent Protection; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 F16 F43 F62 F66 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2013-10-23
New Economics Papers: this item is included in nep-ino and nep-mac
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