Do Labor Market Institutions Affect International Comparative Advantage? An Empirical Investigation

Marianna Belloc

Department of Economics University of Siena from Department of Economics, University of Siena

Abstract: The aim of this paper is to explore the different determinants of international comparative advantage. Starting from a theoretically well founded neoclassical framework, where specialization depends on relative factor endowments and technological differences, we study the role of the institutional diversity in the labor market. We use an international trade model where endogenous effort is included in an otherwise standard production function. Since the effort level can be affected by country-specific labor institutions, the institutional context may in turn be able to influence the international comparative advantage. After illustrating the theoretical motivations for such an effect, we implement a rigorous econometric analysis on a group of OECD countries to test its empirical validity. We obtain that institutions have an important role in explaining the relative economic performance of a number of manufacturing sectors. In particular, stronger labor market institutions are found to advantage capital-intensive sectors and disadvantage labor-intensive ones. Policy implications are derived and discussed

Keywords: Comparative Advantage; Labor Market Institutions; International Specialization (search for similar items in EconPapers)
JEL-codes: F10 F11 J22 J52 (search for similar items in EconPapers)
Date: 2004-12
New Economics Papers: this item is included in nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://repec.deps.unisi.it/quaderni/444.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usi:wpaper:444

Access Statistics for this paper

More papers in Department of Economics University of Siena from Department of Economics, University of Siena Contact information at EDIRC.
Bibliographic data for series maintained by Fabrizio Becatti ().