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International competition and labor market interactions in developed countries

Abstract : The subject of this thesis is the impact of international competition on the product and the labor markets in developed countries. In the first part, price-cost margins are shown to converge across both sectors and countries since the seventies, consistent with deeper economic integration and improved capital market efficiency. However, in contrast to the expected effect of increased competition, the convergence does not take place at the bottom, but results from the joint decrease in initially high margins and increase in initially low margins. Further empirical investigation reveals that import competition and domestic product deregulation have significantly reduced market power, but that these effects have been mostly offset, on average, by the positive impacts on markups of exports, financial deepening and disinflation.
The second part deals with the interactions between globalization and the labor market. Beyond its direct effects on employment and wages, globalization might transform the structure of the labor market. Based on UK firm-level data, markups and workers' bargaining power are estimated to have decreased in the mid-nineties. Evidence is provided that supports the idea that trade might curtail market power in the product as well as in the labor markets. Next, trade with developing countries is shown to have a significant, albeit moderate, impact on deindustrialization in developed countries, contributing on average a fifth of the decline in manufacturing employment share since the seventies.
Finally, a theoretical model integrating labor market imperfections into a geographical economic framework is proposed, to show how capital and trade liberalization can put pressure on labor market institutions.
Capital mobility and falling trade costs render more difficult the endorsement of labor market regulation and induce social partners to deregulate under the threat of relocations.
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Contributor : Lucie Label <>
Submitted on : Tuesday, July 24, 2007 - 4:36:12 PM
Last modification on : Tuesday, January 19, 2021 - 11:08:28 AM
Long-term archiving on: : Thursday, April 8, 2010 - 8:53:07 PM


  • HAL Id : tel-00165106, version 1



Hervé Boulhol. International competition and labor market interactions in developed countries. Economics and Finance. Université Panthéon-Sorbonne - Paris I, 2007. English. ⟨tel-00165106⟩



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