Tariffs, Efficiency Wages and Unemployment

Rajit Biswas () and Kumar Shubham ()
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Rajit Biswas: Centre for Development Studies
Kumar Shubham: Centre for Development Studies

Journal of Industry, Competition and Trade, 2018, vol. 18, issue 4, No 5, 503-511

Abstract: Abstract The present model embeds a model of intra-industry trade into a labour market, which is characterised by efficiency wages. It is shown that tariff protection of the import competing, home produced brands, may cause the equilibrium unemployment rate to shoot up and instead of protecting the sector may cause it to contract. This is possible when elasticity of demand is high and firms have less market power and thus, protectionist effect of tariffs may get completely reversed.

Keywords: Scale economies; Monopolistic competition; Efficiency wages; Unemployment (search for similar items in EconPapers)
JEL-codes: E F (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10842-018-0270-y

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