The Impact of Labor Market Reforms on Capital Flows, Wages and Unemployment

Thomas Beissinger ()

No 390, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The paper contributes to the globalization debate by scrutinizing the international spillover effects which are provoked if a single country reduces the generosity of the unemployment compensation system or weakens labor union power. For this purpose a two-country model with imperfect competition in goods and labor markets and perfect competition in capital markets is developed. It is demonstrated that the comparative-static results depend on the degree of capital mobility, the degree of competition in the goods market and the institutional setup of the unemployment compensation system. Furthermore, it is shown that the impact of country-specific labor market reforms on households in other countries depends on whether the household’s main income source consists of wage income or capital income and profits.

Keywords: Globalization; capital mobility; unemployment; unemployment compensation; wage bargaining; monopolistic competition; welfare state (search for similar items in EconPapers)
JEL-codes: E24 F21 F41 J23 J51 J65 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2001-11
New Economics Papers: this item is included in nep-ifn and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Working Paper: The Impact of Labor Market Reforms on Capital Flows, Wages and Unemployment (2002)
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