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Fragmentation of the value-added-chain is modeled as the reaction of monopolistically competitive firms to the removal of barriers to trade and factor mobility in an integrated trading environment. Since fragmentation requires high-skilled labor, this form of globalization can induce labor...
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This paper proposes a model in which the removal of barriers to trade and factor mobility is associated with endogenous fragmentation of the value-added-chain. Fragmentation is the outcome of cost competition - the profit-maximizing choice of cost structure by monopolistically competitive firms....
Persistent link: https://www.econbiz.de/10001554664
the public concern can be addressed that international fragmentation and outsourcing to low wage countries lead to … outsourcing and critically assess the role of political intervention that aims to reduce unemployment benefits under …
Persistent link: https://www.econbiz.de/10003221958
. Such outsourcing leads to increased wages for the remaining in-house production. We find that stronger unions, which imply … higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a … theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many …
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