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G.Bruno, A.Falzoni, R.Helg, "Measuring the effect of globalization on labour demand elasticity: An empirical application to OECD countries", mimeo July 2001.
A
bstract
There are various paths through which globalization is channelled to the labour market. One of these is the effect on labour demand elasticity. Trade might induce an increase in this elasticity via a scale e¤ect due to the increased competition on the output market and/or via a substitution effect generated by expanding the firm production possibility set to include additional inputs. The focus of this paper is centered on the latter channel of transmission. A labour demand equation is obtained from the solution of a firm's cost minimization problem. The impact of globalization on domestic employment is not restricted to a wage elasticity e¤ect, but also allows for a direct e¤ect with globalization acting as a domestic labour demand shifter. A theoretically consistent labour demand is estimated using a industry-year panel from a number of industrialised countries, including major European countries, Japan and the US over the period 1970-96. Overall we do not find any significant substitution effect of trade on labour demand elasticity. The only exception is France.
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Ultimo aggiornamento:
06/09/2002