Do Labor Market Imperfections Increase Trade Protection? A Theoretical Investigation

Xenia Matschke

No 2006-12, Working papers from University of Connecticut, Department of Economics

Abstract: Labor market imperfections are commonly believed to be a major reason for imposing trade impediments. In this paper, I introduce labor market rigidities that are prevalent in continental European countries into the well-known protection for sale model proposed by Grossman and Helpman (1994). I show that contrary to commonly held views, imperfections in the labor market 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)
JEL-codes: F13 F16 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2006-04, Revised 2007-04
New Economics Papers: this item is included in nep-int
Note: I thank Scott Taylor for extensive discussions regarding this paper. His valuable comments and advice led to substantial improvements. Bob Baldwin, Bob Staiger, Achim Wambach and seminar participants at various universities provided helpful suggestions as well. Financial support from a Deutsche Forschungsgemeinschaft research fellowship is gratefully acknowledged.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://media.economics.uconn.edu/working/2006-12r.pdf Full text (revised version) (application/pdf)
https://media.economics.uconn.edu/working/2006-12.pdf Full text (original version) (application/pdf)

Related works:
Journal Article: Do Labor Market Imperfections Increase Trade Protection? A Theoretical Investigation (2010)
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:uct:uconnp:2006-12

Access Statistics for this paper

More papers in Working papers from University of Connecticut, Department of Economics University of Connecticut 365 Fairfield Way, Unit 1063 Storrs, CT 06269-1063. Contact information at EDIRC.
Bibliographic data for series maintained by Mark McConnel ().