Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94796
Authors: 
Norbäck, Pehr-Johan
Year of Publication: 
1999
Series/Report no.: 
IUI Working Paper 520
Abstract: 
This paper considers a small open economy with an input-output industrial structure that creates vertical linkages and multiple equilibria. An imperfect labor market is introduced by assuming unionized labor. It is shown that a deregulation of the labor market may trigger a large discontinuous expansion of industrial output, as reduced wage-costs start a circular, cumulative process in which expansions of the up-and downstream industries promote each other. Centralization of collective bargaining may, however, also be conductive to industrialization.
Subjects: 
Vertical linkages
Multiple equilibria
Labor unions
JEL: 
F12
J50
O11
Document Type: 
Working Paper

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