Globalisation, EU Enlargement and Income Distribution

Publikation: Wissenschaftliche FachzeitschriftOriginalbeitrag in FachzeitschriftBegutachtung

Abstract

Advanced industrial countries have been exhibiting a steady decline of the labor income shares in the last two decades. We explain this phenomenon by resorting to the old Stolper-Samuelson theorem. The conclusions concerning the impact of free trade on the income distribution are unambiguous in a Heckscher-Ohlin world with two countries, two goods and two factors of production (capital and labor). In contrast, the consequences of FDI from the capital abundant country (EU) to the labor abundant CEEC are ambiguous. Both scenarios are investigated theoretically, simulated with a hypothetical two country CGE model, including the EU and the CEEC and then tested empirically. Accordingly, globalisation has contributed to a decline in the labor income shares in the EU and an increase in the CEEC. Additionally, those EU countries which are engaged more in trade with the CEEC ('mini-globalisation' in Europe) can expect a sharper decline in the wage share.
OriginalspracheEnglisch
Seiten (von - bis)16 - 34
FachzeitschriftInternational Journal of Public Policy
Jahrgang6
Ausgabenummer1/2
PublikationsstatusVeröffentlicht - 1 Feb. 2010

Österreichische Systematik der Wissenschaftszweige (ÖFOS)

  • 506004 Europäische Integration

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