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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Description/Abstract
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.
| Item Type: | Article |
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| Related URLs: | |
| 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 |
| Item ID: | 33416 |
| Date Deposited: | 16 May 2006 |
| Last Modified: | 02 Mar 2012 11:46 |
| Contributors: | Pica, Giovanni (Author) |
| Date: | 2003 |
| Status: | Published |
| Contact Email Address: | gio.pica@gmail.com |
| URI: | http://eprints.soton.ac.uk/id/eprint/33416 |
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