Employment protection, international specialization and innovation

Gilles Saint-Paul

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: We develop a model to analyse the implications of firing costs on incentives for R&D and international specialization. The Key idea is paying the firing cost, the country with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Under international trade, an international product cycle emerges where, roughly, new goods are first produced in the low firing cost country will specialize in 'secondary innovations', that is, improvements in existing goods, while the low firing cost country will more specialize in 'primary innovation', that is, invention of new goods.

Keywords: Employment protection; innovation; R&D; international product cycle; labour market flexibility (search for similar items in EconPapers)
JEL-codes: F12 F17 J21 J32 O3 (search for similar items in EconPapers)
Date: 1996-01, Revised 1997-05
New Economics Papers: this item is included in nep-ltv
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Employment protection, international specialization, and innovation (2002)
Working Paper: Employment Protection, International Specialization, and Innovation (1996)
Working Paper: Employment Protection, International Specialization, and innovation (1996)
Working Paper: Employment Protection, International Specialization, and Innovation (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:256

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