The Impact of Globalisation with Rigid Labour Markets

Tobias Seidel

Munich Dissertations in Economics from University of Munich, Department of Economics

Abstract: This dissertation examines the impact of globalisation when labour markets are imperfect. Chapters 2 and 3 start with an overview about recent trends in globalisation and provide evidence for labour market rigidity in developed countries. Chapter 4 studies minimum wages in a simple factor allocation model and derives basic results that are generalised in a Heckscher-Ohlin model in chapter 5. Chapter 6 analyses wage rigidity in a specific factors model. Finally, imperfect labour markets are implemented in a new economic geography framework to show that unemployment fosters agglomeration of economic activity. The main message is that labour market rigidity causes welfare losses from trade in a number of theoretical models. It is argued that wage subsidies can help to overcome both the inefficiency and the distribution problem.

Keywords: Globalisation; Imperfect Labour Markets; Trade; New Economic Geography (search for similar items in EconPapers)
Date: 2007-01-25
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