Trade and the (dis)incentive to reform labor markets: The case of reform in the European Union

• 成果类型: Article
• 署名作者: Alessandria, George; Delacroix, Alain
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; University of Quebec; University of Quebec Montreal
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2008.02.001
• 发表日期: 2008
• 页码: 151-166
• 关键词: firing costs; international trade; labor market reform

摘要

We study the relation between international trade and the gains to reform labor markets by removing firing restrictions. We find that trade linkages imply substantially smaller benefits to reform than those calculated in the closed economy general equilibrium model of Hopenhayn and Rogerson [Hopenhyn, Hugo, Rogerson, Richard, 1993. Job Turnover and policy evaluations: a general equilibrium analysis. journal of Political Economy 101 (5), 915-938 October]. When economies trade, labor market policies in one country spill over to other countries through their effect on the terms of trade. A key finding in the open economy is that the share of the welfare gains from domestic labor market reform exported substantially exceeds the share of goods exported. Thus, with international trade, a country retains little to no benefit from unilaterally reforming its labor market. A coordinated elimination of firing taxes yields considerable benefits. We also find that the U.K. benefits from labor market reform by its continental trading partners. These insights provide some explanation for recent efforts toward labor market reform in the European Union. (C) 2008 Elsevier B.V. All rights reserved.