Product Market Integration, Wage Dispersion and Unemployment

Torben M. Andersen ()
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Torben M. Andersen: Aarhus University

No 279, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Even when international product market integration is taking place between fairly similar countries with low labour mobility, it may have important effects for labour markets by increasing the mobility of jobs. This creates both opportunities through exports and threats from imports. Is there any reason why the benefits and costs of product market integration should be unequally distributed across different groups in the labour market? Considering integration as a gradual process lowering trade frictions it is found that there is such a bias in the sense that the gains tend to accrue to the high paid and the loses to the low paid. Product market integration may thus lead to a more inequal distribution of wages and employment, even though there are aggregate gains in terms of higher real incomes and employment.

Keywords: wage formation; inequality and unemployment; Trade frictions (search for similar items in EconPapers)
JEL-codes: F15 J30 J50 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2001-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Labour Economics, 2005, 12 (3), 379-406

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