Minimum Wage, Trade and Unemployment in General Equilibrium

Marjit, Sugata; Ganguly, Shrimoyee; Acharyya, Rajat

doi:10.2139/ssrn.3536735

Cited by 8 publications

(6 citation statements)

References 10 publications

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“…For example, Marjit (1991) focuses on rural versus urban employment, and shows that, in a Harris-Todaro-type structure, where industry uses agricultural product as an input, an urban employment subsidy unambiguously increases total employment. Similarly, Marjit et al (2021) show that the empirical finding of a positive employment effect of higher minimum wages in Card and Krueger (1993) is plausible, especially in the framework of Gruen and Corden (1970), where one sector is nontraded.…”

Section: The Modelmentioning

confidence: 81%

“…In terms of factor prices, a fall in the relative price of manufactures and a rise in the relative price of high-tech would tend to dampen the factor price movements-the return to capital would rise by less, and the return to both skilled and unskilled labor would fall by less. Given the global scope of automation and labor elimination, it would be useful to explore the implications further, in addition to the related case where manufacturing and high-tech are assumed traded while services are not, echoing the Marjit et al (2021) analysis, and allowing the price of services to be endogenous.…”

Section: Discussionmentioning

confidence: 99%

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Labor‐eliminating technology, wage inequality, and trade protectionism

Gilbert

Koska

Oladi

2022

J Public Economic Theory

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Rapid automation in manufacturing has raised pressing questions in public and policy discourse regarding the effects of a labor-eliminating technical progress in an industry. We address the implications of a labor-eliminating technology adopted in manufacturing for factor price changes, for skilled and unskilled wage gap, and for trade policies intending to protect workers. Using an otherwise traditional multi-sector general equilibrium model, we derive the conditions under which a labor-eliminating technology will be adopted in manufacturing, and show that such a technical change in manufacturing will increase the rate of return on capital, and decrease both skilled and unskilled labor wages. We derive conditions under which wage inequality increases, and most importantly, we show that implementing protectionist trade policies in the industry experiencing a labor-eliminating technical progress will paradoxically hurt the workers that the policy is meant to protect.

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Section: The Modelmentioning

confidence: 81%

Section: Discussionmentioning

confidence: 99%

Labor‐eliminating technology, wage inequality, and trade protectionism

Gilbert

Koska

Oladi

2022

J Public Economic Theory

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“…Country A produces an exportable intermediate good, Y , and an import-competing intermediate good, M , with the help of unskilled labour and capital which are perfectly mobile. Thus, sectors Y and M form a Heckscher–Ohlin (H–O) nugget in this three-sector model (Jones & Marjit 1992; Marjit et al, 2020; Marjit & Gupta, 2022). It is assumed at the beginning, the intermediate product Y is exported by country A to both country B and the ROW.…”

Section: The Model and The Basic Resultsmentioning

confidence: 99%

Customs Union, Wage Inequality and Welfare in General Equilibrium

Marjit

Sen

Gupta

2022

Foreign Trade Review

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The article attempts to consider the impact of a customs union formed between two small countries embedded in the global economy and trading in intermediates, in terms of a general equilibrium framework. It shows that with such a union both countries will gain, although there will be asymmetric effect on wage inequality. However, with higher capital stock the significance of the formation of customs union will be undermined. It also shows that perfect international capital mobility will lead to finite changes in the economy, shutting down the less capital intensive unskilled export sector in each country, which in turn makes the bilateral union irrelevant. Further tariff reduction will increase inequality in both countries. We have also considered the welfare effects of formation of customs union in the form of tariff cut and such a tariff reduction unequivocally improves welfare of the customs union irrespective of small country and large country assumptions, without any intra-union income transfer. JEL Codes: F02, F11, F55, F68

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“…We now consider the case of unemployment to see how finance becomes critical in a situation of unemployment. We draw from Davis (1998), Meckel (2020), Marjit and Mandal (2021), and from more contemporary interest in the topic on trade and unemployment (Marjit, Ganguly and Acharyya (2021), and Marjit and Gupta (2022). Let us suppose that now in the full employment set up, one of the countries imposes a minimum wage.…”

Section: Unemployment and Perfect Credit Marketmentioning

confidence: 99%