Abstract
This paper explores the consequences of different aspects of previous termglobalization on wage setting,next term (un)employment, and the welfare state. Social standards are endogenously determined by politicians who have to solve a trade-off between equity and efficiency. This trade-off ultimately results from the previous termwage-settingnext term process, which is modeled as a (sectorally) ...
Abstract
This paper explores the consequences of different aspects of previous termglobalization on wage setting,next term (un)employment, and the welfare state. Social standards are endogenously determined by politicians who have to solve a trade-off between equity and efficiency. This trade-off ultimately results from the previous termwage-settingnext term process, which is modeled as a (sectorally) decentralized bargain between firms and unions. Trade is of the intraindustry variety. It is shown that previous termglobalizationnext term does not generally alter the trade-off between equity and efficiency faced by social policy makers.
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