Kiel Working Papers, Kiel Institute for World Economics
No 1599:
Wage subsidies and international trade: When does policy coordination pay?
Sebastian Braun and Christian Spielmann
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: Wage subsidies, policy spill-overs, international policy coordination, unionised labour markets, trade, asymmetric labour market institutions; (follow links to similar papers)
JEL-Codes: F16,; F42,; J38,; H87; (follow links to similar papers)
40 pages, March 2010
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