Welfare comparison between a closed and open economy with NDC Pension Scheme and Imperfect Labor Market

2020 ◽  
Author(s):  
Leran Wang
Keyword(s):  
Labor Market ◽  
Open Economy ◽  
Pension Scheme ◽  
Welfare Comparison

Endogenous labor market institutions in an open economy

2012 ◽  
Vol 23 ◽  
pp. 30-45 ◽  
Author(s):  
Gabriel J. Felbermayr ◽  
Mario Larch ◽  
Wolfgang Lechthaler
Keyword(s):  
Labor Market ◽  
Open Economy ◽  
Labor Market Institutions ◽  
Market Institutions ◽  
Endogenous Labor

scholarly journals Labor Market Informality and the Business Cycle

2020 ◽  
Vol 20 (256) ◽  
Author(s):  
Frederic Lambert ◽  
Andrea Pescatori ◽  
Frederik Toscani
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Open Economy ◽  
Developing Economies ◽  
Small Open Economy ◽  
Gdp Per Capita ◽  
Formal Sector ◽  
Cycle Frequency ◽  
Dynamic Stochastic ◽  
Per Capita

Labor market informality is a pervasive feature of most developing economies. Motivated by the empirical regularity that the labor informality rate falls with GDP per capita, both at business cycle frequency and in a cross-section of countries, and that the Okun's coefficient falls with the level of labor informality, we build a small open-economy dynamic stochastic general equilibrium model with two sectors, formal and informal, which can replicate these key stylized facts. The model is calibrated to Colombia. The results show that labor market and tax reforms play an important role in changing the informality rate but also caution against over-optimism - with low GDP per capita, informality will always be relatively high as there is insufficient demand for formal goods. Quantitatively we find that higher productivity in the formal sector is key in explaining the difference between Colombia and countries with significantly lower informality. We use the model to study how labor informality and labor market frictions mediate the cyclical response of the economy to shocks, including commodity price shocks which are particularly relevant in Latin America. Informality is shown to play an important role as a shock absorber with the informal-formal margin limiting movements in the employed-unemployed margin.

scholarly journals Multinational Enterprises, Foreign Knowledge and Host Country

Equilibrium ◽  
2012 ◽  
Vol 7 (1) ◽  
pp. 7-20 ◽  
Author(s):  
Andrzej Cieślik
Keyword(s):  
Labor Market ◽  
Host Country ◽  
Open Economy ◽  
Multinational Enterprises ◽  
Knowledge Spillovers ◽  
Small Open Economy ◽  
Capital Intensity ◽  
Flexible Labor ◽  
Multinational Activity ◽  
The Impact

In this paper we study how the expansion of multinational enterprises in the host country affects its wages using a general equilibrium factor specific framework for a small open economy with a flexible labor market. We identify three potential effects of MNE activity associated with the transfer of foreign knowledge, diffusion of this knowledge among indigenous firms and the inflow of capital from abroad. We show that the impact of multinational enterprises on wages in the host country depends on differences in capital intensity between multinational and local sectors, the amount of capital transferred to the host country from abroad and the magnitude of knowledge spillovers stemming from multinational activity to indigenous firms.

scholarly journals How preferences shape the welfare and employment effects of trade

2021 ◽  
Author(s):  
Hartmut Egger ◽  
Simone Habermeyer
Keyword(s):  
Labor Market ◽  
Open Economy ◽  
Welfare Effects ◽  
Wage Bargaining ◽  
Production Factor ◽  
Firm Level ◽  
Trade Model ◽  
Differentiated Goods ◽  
Competitive Labor Market ◽  
Homogeneous Good

AbstractWe set up a trade model with two countries, two sectors, and one production factor, which features a home-market effect due to the existence of trade costs. We consider search frictions and firm-level wage bargaining in the sector producing differentiated goods and a perfectly competitive labor market in the sector producing a homogeneous good. Consumers have price-independent generalized-linear preferences over the two types of goods, covering homothetic and quasi-homothetic preferences as two limiting cases. Due to the specific functional forms of indirect utility, homothetic preferences lead to risk aversion, while quasi-homothetic preferences lead to risk neutrality in our model. We show that trade between two countries that differ in their population size leads to an expansion of the differentiated goods sector and a contraction of the homogeneous good sector in the larger economy. This induces the larger country to net-export differentiated goods at the cost of a higher economy-wide rate of unemployment in the open economy (with the effects reversed for the smaller country). The welfare effects of trade depend on the preference structure. Looking at the two limiting cases, we show that the larger country is likely to benefit from trade if preferences are homothetic, whereas losses from trade are possible if preferences are quasi-homothetic. The opposite is true in the smaller country. This reveals an important role of preferences for the welfare effects of trade in the presence of labor market imperfection, a result we further elaborate on by considering more general preferences as well as differences of countries in their per-capita income levels.

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