Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/76508
Authors: 
Kreickemeier, Udo
Year of Publication: 
2004
Series/Report no.: 
CESifo Working Paper 1185
Abstract: 
This paper analyzes trade in an asymmetric 2×2×2 world, where the two countries, labelled America and Europe, differ in their attitudes towards wage inequality. In both America and Europe, fair wage considerations compress differentials between the wages for skilled and unskilled workers, leading to involuntary unemployment of unskilled workers in equilibrium. European workers are more averse to wage inequality than American workers though, and as a consequence Europe is characterised by lower wage differentials as well as higher unemployment. Allowing for endogenous skill formation in both countries, the effects of a globalization shock - modelled as the entry of newly industrializing countries into the trading world - on prices and employment levels are derived.
Subjects: 
globalization
globalisation
unemployment
fair wages
skill upgrading
Document Type: 
Working Paper

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