This paper considers trade in an asymmetric 2x2x2 world, the two countries being labelled America and Europe. In America, the labor market is perfectly competitive, with flexible wages ensuring full employment. Europe faces unemployment due to efficiency wages. We derive the conditions for there...

world, where the two countries (`Europe' and `America') differ in their preferences towards wage inequality. Fair wage considerations compress wage differentials in both countries. European workers are more averse to wage inequality, and Europe is characterized by lower wage differentials and...

In this paper, we introduce the fairness approach to efficiency wages into a standard model of international fragmentation. This gives us a theoretical framework in which wage inequality and unemployment rates are co-determined and therefore the public concern can be addressed that international...

This paper analyses the effects of tariff reforms on welfare and market access in a competitive small open economy that is characterised by involuntary unemployment due to non-market clearing wages that are fixed either in terms of the numeraire or in real terms. We show that recent...

This paper analyses trade in an asymmetric 2x2x2 world, where the two countries (quot;Europequot; and quot;Americaquot;) differ in their preferences towards wage inequality. Fair wage considerations compress wage differentials in both countries, leading to involuntary unemployment of unskilled...

In this paper, we introduce the fairness approach to efficiency wages into a standard model of international fragmentation. This gives us a theoretical framework in which wage inequality and unemployment rates are co-determined and therefore the public concern can be addressed that international...

In this paper we develop a model of a multi-sector multi-factor small open economy with involuntary unemployment due to fair wages. The model is used inter alia to analyse the labour market effects of changes in unemployment benefits and the domestic labour supply. Our analysis covers both the...

In this paper we analyze the effects of global and national technological change on employment levels and relative wages in an integrated two-country world ("Europe" and "America"), where both countries are characterized by equilibrium unemployment due to fair wage constraints. The asymmetry...

The standard competitive trade model, extended to include many goods and factors, is used to establish two results. First, integration of goods markets decreases on average international disparities in the real returns of internationally immobile factors, irrespective of whether there is...

We analyse the behaviour of a multi-sector small open economy with involuntary unemployment due to fair wages. The equilibrium level of employment depends in an intuitively appealing way on the sectoral structure of the economy. It is shown that induced changes in employment are a driving force...