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Workshop on Globalization
Speakers and abstracts of the papers
Trade Unions Go Global !
We analyze the link between occupational health and safety (OHS) and the role of trade unions in a globalizing world. We argue - consistent with economic history - that worker movements play a crucial role in making work places safer. We propose a model of institutionalized worker movements, i.e. trade unions, where trade unions set work place safety and firms choose employment. More safety is good for workers as it reduces the probability of being injured at work but it is bad for a firm as it tends to reduce productivity of the firm. From a social welfare perspective, there is an optimal level of occupational safety. Trade between a country with trade unions setting work place safety (the North) and a union-free country (the South) can imply a reduction in work standards in the North. When trade unions are established in the South, world-wide welfare increases.
Globalization and Individual Gains from Trade
We analyze the impact of globalization on the individual gains from trade in a general equilibrium model of monopolistic competition in which agents are heterogeneous between and within countries. Our variable elasticity setting allows us to disentangle two of the main channels through which trade affects consumer welfare: product diversity and pro- competitive effects. We show that, although trade always reduces the price-wage ratios in both countries, its impact on variety is less unambiguous. Whereas consumers’ choice set in the country with the lower average labor efficiency always expands, that in the country with the higher average labor efficiency may actually shrink. When the latter occurs, the agents who put higher values on variety are more likely be hurt by trade because the increase in purchasing power does not allow to compensate for the reduction in variety. Calibrating our model on estimates for the U.S. income distribution in 1997, and using data on 185 countries, our findings suggests that trade with countries of similar GDP per capita makes all agents better off; whereas trade with larger countries having lower GDP per capita may adversely affect up to 15-20% of agents.
Trade Liberalization and Productivity Growth
This paper presents a trade model with firm-level productivity differences and R&D-driven growth. Trade liberalization causes the least productive firms to exit but also slows the development of new products. The overall effect on productivity growth depends on the size of intertemporal knowledge spillovers in R&D. When these spillovers are relatively weak, then trade liberalization promotes productivity growth in the short run and makes consumers better off in the long run. However, when these spillovers are relatively strong, then trade liberalization retards productivity growth in the short run and makes consumers worse off in the long run.
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