Technology Choice, Financial Sector and Economic Integration Under the Presence of Efficiency Wages

Lei Wen and Haiwen Zhou
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Lei Wen: Shaanxi Normal University

Open Economies Review, 2020, vol. 31, issue 1, No 4, 95-112

Abstract: Abstract Impact of economic integration on unemployment is studied in a general equilibrium model in which unemployment is a result of the existence of efficiency wages. Banks provide capital to manufacturing firms and engage in oligopolistic competition. Manufacturing firms choose technologies and also engage in oligopolistic competition. A country with a more efficient financial sector has a lower unemployment rate and a comparative advantage in producing manufactured goods. Trade integration decreases the unemployment rate and increases the wage rate and the equilibrium level of technology. An additional financial integration will decrease the unemployment rate and increase the wage rate and the level of technology further.

Keywords: Unemployment; Economic integration; Efficiency wages; Choice of technology; Two-tier oligopoly (search for similar items in EconPapers)
JEL-codes: E24 F12 J64 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Technology Choice, Financial Sector and Economic Integration under the Presence of Efficiency Wages (2019)
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DOI: 10.1007/s11079-019-09533-x

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