| Author: | Davis, D. |
| Title: | Does European unemployment prop up American wages? National labour markets and global trade |
| Journal: | American Economic Review
1998 : JUN, VOL. 88:3, p. 478-494 |
| Index terms: | EUROPE UNEMPLOYMENT LABOUR MARKETS |
| Language: | eng |
| Abstract: | The author considers trade between a flexible-wage America and a rigid-wage Europe. In a benchmark case, a move from autarky to free trade doubles European unemployment. American wages rise to the European level. Entry of the unskilled "South" to world markets raises European unemployment. Europe's commitment to the high wage wholly insulates America from the shock. Immigration to America raises American income, but lowers European income dollar for dollar, while European unemployment rises. |
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