Fair Wages in the Open Economy

Bibliographic Data

ID9723720
AuthorsJonas Agell, Per Lundborg
Year1995
Volume62
Issue247
Pages335
Publication date1995-08-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueEconomica (JOURNAL)
Journal identifiersISSN: 0013-0427 • E-ISSN: 1468-0335
PublisherJSTOR (PUBLISHER)
DOI10.2307/2554871
OpenAlexW2042991168
LanguageEN
Citations received5
References cited9

The authors show how an extended theory of fair wages can be incorporated in the two-by-two Heckscher-Ohlin model. An important feature of the model is the existence of involuntary unemployment. Several results stand out. First, there is no longer a simple relation between measures of factor abundance and trade patterns. Second, factor-price equalization will generally not occur. Third, differences in social norms explain why terms of trade shocks produce nonuniform adjustments in real wages and unemployment across otherwise similar countries. Fourth, losses from trade may occur. Finally, in countries where fairness considerations are important, tariffs may increase welfare. Copyright 1995 by The London School of Economics and Political Science

Economics · Labour economics · Monetary economics · Open economy · Economic theories and models · Labor market dynamics and wage inequality · Political Economy and Marxism