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Wage bargaining, trade and growth

Wolf-Heimo Grieben () and Fuat Şener

Research in Economics, 2017, vol. 71, issue 3, 564-587

Abstract: We construct a North-South product-cycle model of trade with fully-endogenous growth and union wage bargaining. Economic growth is driven by Northern entrepreneurs who conduct R&D to innovate higher quality products. Northern production technologies can leak to the South upon successful imitation. The North has two sectors: a tradable industrial goods sector (manufacturing) where wages are determined via a bargaining process and a non-tradable sector (services) where wages are flexible. The South has only a tradable industrial goods sector where wages are flexible.

Keywords: Schumpeterian growth; Product cycle; Trade liberalization; Labor unions; Bargaining power; Unemployment (search for similar items in EconPapers)
JEL-codes: F12 F43 J51 O31 O32 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:reecon:v:71:y:2017:i:3:p:564-587