European Unemployment, US Wages, and the Asian Emergence.

This paper adapts a more general yet standard global model to investigate international effects of wage regulation and of the Asian emergence. The Davis result that European unemployment raises the wage in the US is supported, though the generalisations in our model greatly weaken it. By contrast the Asian emergence is found to confer on the northern economies a terms of trade gain and overall economic expansion. The effect is to reduce, rather than increase, European unemployment even while it raises European wage inequality.