International Political Spillovers: The Case of Labour Market Regulation
Pica, Giovanni (2003) International Political Spillovers: The Case of Labour Market Regulation. European University Institute Florence. European Forum. Robert Schuman Centre for Advanced Studies. Working Papers, (12), 1-29. (doi:10.2139/ssrn.497863).
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This paper explores how the political support for Labor Market Regulation (LMR) is affected by economic and political integration in a two-country overlapping generations model where countries behave strategically. We model LMR as wage regulation and analyze three institutional settings: Autarchy, Economic Union and Political Union.
We show that, if the economy is dynamically efficient, the support for labor regulation is lower in the Economic Union - characterized by capital mobility - than in Autarchy. This decreases the welfare of the owners of the less mobile factor (labor) even in a setting where today workers are next period capitalists. A Political Union restores, under symmetry, the autarchic outcomes and welfare levels. The asymmetric case is also analyzed.
|Keywords:||under-employment, factor mobility, political integration, olg model, dynamic efficiency, factor shares, political economy, economic integration, globalization|
|Subjects:||J Political Science > JA Political science (General)
H Social Sciences > HV Social pathology. Social and public welfare
|Divisions:||University Structure - Pre August 2011 > School of Social Sciences > Economics
|Date Deposited:||16 May 2006|
|Last Modified:||27 Mar 2014 18:20|
|RDF:||RDF+N-Triples, RDF+N3, RDF+XML, Browse.|
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