Imperfect labor market and convergence: theory and evidence for some OECD countries

Carmeci, Gaetano; Mauro, Luciano

doi:10.1016/s0161-8938(03)00070-x

Cited by 19 publications

(13 citation statements)

References 22 publications

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“…We also assume that they are freely traded across countries. 15 Final goods are produced with the following CES Armington aggregator: 11 We also impose the usual no-Ponzi-game condition that requires the household's lifetime budget constraint to be satis…ed. 12 r t is not indexed by a country superscript because we consider a global …nancial market.…”

Section: Final Goodsmentioning

confidence: 99%

“…15 As a result, we do not impose any restriction on the location of the production of …nal goods. Suppose all …nal goods are produced in the Foreign (Home) country.…”

Section: Final Goodsmentioning

confidence: 99%

“…36 In the case of employment-oriented unions, decreasing their bargaining power would lead to lower employment and higher unemployment. 37 For example, Carmeci and Mauro (2003) estimate dynamic panel regressions using data on OECD countries and …nd that decreasing labor union density indeed has a positive e¤ect on long-run growth. the two countries equally.…”

Section: Quantitative Analysismentioning

confidence: 99%

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Unions, innovation and cross-country wage inequality

Chu

Cozzi

Furukawa

2016

Journal of Economic Dynamics and Control

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This study explores the macroeconomic e¤ects of labor unions in a two-country R&D-based growth model in which the market size of each country determines the incentives for innovation. We …nd that an increase in the bargaining power of a wage-oriented union leads to a decrease in employment in the domestic economy. This result has two important implications on innovation. First, it reduces the rates of innovation and economic growth. Second, it causes innovation to be directed to the foreign economy, which in turn causes a negative e¤ect on domestic wages relative to foreign wages in the long run. We also derive welfare implications and calibrate our model to data in the US and the UK to quantify the e¤ects of labor unions on social welfare and wage inequality across countries. Our calibrated model is able to explain about half of the decrease in relative wage between the US and the UK from 1980 to 2007. Furthermore, the decrease in unions'bargaining power leads to quantitatively signi…cant welfare gains in the two countries.JEL classi…cation: O30, O43, E24, J51

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Section: Final Goodsmentioning

confidence: 99%

“…15 As a result, we do not impose any restriction on the location of the production of …nal goods. Suppose all …nal goods are produced in the Foreign (Home) country.…”

Section: Final Goodsmentioning

confidence: 99%

Section: Quantitative Analysismentioning

confidence: 99%

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Unions, innovation and cross-country wage inequality

Chu

Cozzi

Furukawa

2016

Journal of Economic Dynamics and Control

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“…The use of panel data has become prevalent in growth convergence studies. Islam (2003) conducts a detailed survey of the main advantages of panel-data specification, 25 in which context dynamic panel-data specification has been increasingly adopted (Carmeci and Mauro 2003;Caselli, Esquivel, and Lefort 1996;Yudong and Weeks 2000), with some very recent applications to evaluation of Objective 1 expenditure (Beugelsdijk and Eijffinger 2005). The dynamic model takes explicit account of serial correlation which often affects growth, especially in the short term.…”

Section: The Estimated Modelmentioning

confidence: 99%

Regional Growth and Policies in the European Union: Does the Common Agricultural Policy Have a Counter‐Treatment Effect?

Esposti

2007

American J Agri Economics

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This article investigates the impact of both the Common Agricultural Policy and structural policies on European regions by estimating a conditional growth convergence model. The Common Agricultural Policy influences the convergence process by affecting regional aggregate productivity, eventually conflicting with the structural policies designed to promote growth in lagging regions. The conditional convergence model is specified in a dynamic panel data form and applied to 206 regions observed from 1989 to 2000. A GMM estimation is applied in order to obtain consistent estimates of both the convergence parameter β and the impact of the conditioning variables, policy measures in particular. Copyright 2007, Oxford University Press.

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“…The model above is well suited to a cross-countries context where it can be tested using traditional proxies of mark up, for example, the replacement ratio (Carmeci and Mauro, 1999). In a regional context such as this, the application of the model needs some remarks.…”

Section: The Centralized Union Casementioning

confidence: 99%

TheConvergence of the Italian Regions and Unemployment: Theory and Evidence

Carmeci

Mauro

2002

Journal of Regional Science

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We explore the links between the halt of the convergence process of Italian regions at the beginning of the 1970s and the increase in regional unemployment dispersion. We consider a neoclassical exogenous growth model with an imperfect labor market and show that during the transitional dynamics the imperfections of the labor market negatively influence the output growth rate. In particular, the model implies that centralized bargaining is likely to set a national minimum wage that is too high with respect to the labor productivity of the less developed regions, resulting in a negative impact on their per capita output growth. We test the implications of the model on a regional panel data set using the GMM framework. Both our market distortion measure and the unemployment rate are found to significantly lower the growth rate of per capita output. Copyright 2002 Blackwell Publishers Inc.

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Imperfect labor market and convergence: theory and evidence for some OECD countries

Cited by 19 publications

References 22 publications

Unions, innovation and cross-country wage inequality

Unions, innovation and cross-country wage inequality

Regional Growth and Policies in the European Union: Does the Common Agricultural Policy Have a Counter‐Treatment Effect?

TheConvergence of the Italian Regions and Unemployment: Theory and Evidence

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