GEP Research Paper 02/34
A General Model of Fair Wages in an Open Economy
U. Kreickemeier and S. Schoenwald
Abstract
We analyse the behaviour of a multi-sector small open economy with involuntary unemployment due to fair wages. The equilibrium level of employment depends in an intuitively appealing way on the sectoral structure of the economy. It is shown that induced changes in employment are a driving force behind many of the comparative static results. Fair wage variants of the Heckscher-Ohlin and the Ricardo-Viner model, respectively, are derived as special cases.
Issued in December 2002.
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