Wage subsidies and international trade: When does policy coordination pay?

Sebastian Braun and Christian Spielmann

No 1599, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, a fact widely ignored in the academic literature. This paper studies the effects of wage subsidies in an international duopoly model with unionised labour markets. We document both positive and negative spill-over effects and discuss the benefits and costs from international policy coordination both for the case of symmetric and asymmetric labour market institutions. Our results suggest that institutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far.

Keywords: Trade Wage subsidies; policy spill-overs; international policy coordination; unionised labour markets; trade; asymmetric labour market institutions (search for similar items in EconPapers)
JEL-codes: F16 F42 H87 J38 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Wage subsidies and international trade: When does policy coordination pay? (2012)
Working Paper: Wage subsidies and international trade: When does policy coordination pay? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1599

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