Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/30534
Authors: 
Grieben , Wolf-Heimo
Sener, Fuat
Year of Publication: 
2009
Series/Report no.: 
CESifo Working Paper 2889
Abstract: 
We analyze the growth and welfare effects of globalization in a dynamic Schumpeterian North-South product-cycle model. Economic growth is driven by R&D activities of Northern entrepreneurs. Top Northern production technologies are imitated by the South. In the North, there is wage bargaining between a labor union and firms, and a minimum wage rate exists. Unilateral Northern trade liberalization reduces the rate of innovation, increases Northern unemployment, and reduces both Northern and Southern per-capita welfare. The effects are reversed in the case of unilateral Southern trade liberalization. Hence, wage bargaining above a given minimum wage promotes mercantilist behavior of developed countries.
Subjects: 
globalization : product cycle
endogenous growth
labor unions
minimum wage
mercantilism
JEL: 
F12
F43
J51
O31
O32
Document Type: 
Working Paper

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