Globalisation, wage adjustment, and unemployment: An empirical analysis based on the factor price frontier

Dietmar Hornung, Axel Schimmelpfennig and Rüdiger Wapler

No 834, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We investigate the effects of globalisation on the labour market using the factor price frontier. The factor price frontier defines a negative relationship between the real rate of return and the real wage rate. As international capital mobility equalises the real rate of return in all economies, real wages also have to converge. If they do not adjust, unemployment and technical change will result in relatively capitalabundant countries. We estimate the factor price frontier for the United States and for Germany with the Johansen procedure. While the U. S. economy adjusts along a single factor price frontier throughout the sample, there are three distinct frontiers in the German case. The outward shifts of the factor price frontier coincide with significant hikes in unemployment.

JEL-codes: E24 F21 (search for similar items in EconPapers)
Date: 1997
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/46876/1/258074523.pdf (application/pdf)

Related works:
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:zbw:ifwkwp:834

Access Statistics for this paper

More papers in Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel) Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().