Labor Market Rigidities and the Political Economy of Trade Protection

Xenia Matschke

Santa Cruz Center for International Economics, Working Paper Series from Center for International Economics, UC Santa Cruz

Abstract: Labor market rigidities are commonly believed to be a major reason for imposing trade impediments. In this paper, I introduce labor market rigidities (such as influential trade unions and high unemployment benefits), that are prevalent in continental European countries, into the well-known Grossman and Helpman (1994) protection for sale model, which has emerged as the leading model in the political economy of trade protection literature. I show that contrary to commonly held views, these labor market rigidities do not necessarily increase equilibrium trade protection. A testable equilibrium trade protection equation is also derived. The findings in this paper are hence particularly relevant for empirical tests of trade policy determinants in economies with more regulated labor markets.

Keywords: Tariffs; trade protection; protection for sale; labor market (search for similar items in EconPapers)
Date: 2004-01-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://www.escholarship.org/uc/item/9gd146fx.pdf;origin=repeccitec (application/pdf)

Related works:
Working Paper: LABOR MARKET RIGIDITIES AND THE POLITICAL ECONOMY OF TRADE PROTECTION (2004)
Working Paper: Labor Market Rigidities and the Political Economy of Trade Protection (2004)
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:cdl:scciec:qt9gd146fx

Access Statistics for this paper

More papers in Santa Cruz Center for International Economics, Working Paper Series from Center for International Economics, UC Santa Cruz Contact information at EDIRC.
Bibliographic data for series maintained by Lisa Schiff ().