Trade liberalization and the labor market revisited

Document Type

Article

Publication Title

International Advances in Economic Research

Publication Date

11-1-2005

Abstract

This paper provides new insights in understanding the adjustments of the labor market to trade liberalization policies in an economy producing tradeables and nontradeables. The results of the paper indicate that the short-run effects of trade liberalization on wages, labor allocation and worker welfare is contingent on certain explicit production and demand conditions that exist in an economy. The production condition is related to the slope of the labor demand curve in a given economy and the demand condition is related to the difference in the cross-price elasticity of demand of nontradeables to the price of importables and exportables. The necessary combination of these conditions needed for trade liberalization to be welfare improving in the short run is explored. © International Atlantic Economic Society 2005.

Volume

11

Issue

4

First Page

417

Last Page

432

DOI

10.1007/s11294-005-2278-4

ISSN

10830898

E-ISSN

1573966X

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