International Trade,Migration and Unemployment – The Role of Informal Sector

This paper provides an elaborate general equilibrium framework by including informal economic activities in a model of trade, migration and unemployment. Existence of informal activities is critical in generating positive employment effects of liberal trade policies. Following a tariff cut informal wage increases and rate of unemployment goes down under reasonable conditions. Next we generalize the benchmark model to capture the phenomenon of sequential migration: from agriculture to urban informal sector, and then to urban formal sector. Positive employment effect of reformatory trade policy partly owes to the fact that the presence of informal sector directly reduces the cost of migration and, hence, further induces the process of outmigration from agricultural sector. The paper also extends the benchmark model to include both informal intermediate and final good.     

Industrial labour productivities and tariffs in South Africa

The analysis of the effect of tariffs for labour productivity faces the challenge of tariff policy endogeneity. Tariff policy is designed to promote economic development and the industrial sector tariff structure may reflect characteristics of the industries protected. We seek to identify the effect of tariffs by taking advantage of multilateral tariff liberalization using reductions in industrial sector tariffs in other world regions as instruments for sectoral tariff reductions in South Africa. The data cover 28 manufacturing sectors over the period 1988–2003. We find that tariff reductions have stimulated labour productivity when instrumented by multilateral tariffs. The ordinary least‐squares estimates show downward bias and this confirms the endogeneity of tariffs. Investigation of channels of effects shows some support for the importance of competitive pressure and technology spillover from trade liberalization.     

Skilled–unskilled wage inequality,nontraded good and endogenous supply of skilled labour: A theoretical analysis

The paper develops a static four sector competitive general equilibrium model of a small open economy in which skilled labour is endogenously produced by the education sector and is mobile between a traded good sector and a nontraded good sector. Capital is also perfectly mobile among the education sector, skilled labour using traded good sector and the nontraded good sector. However, land and unskilled labour are specific to another traded good sector. We analyse the effects of change in different factor endowments and reduction in tariff rate on skilled–unskilled wage inequality. We find that the effect of a change in different parameters on wage inequality depends on the factor intensity ranking between two skilled labour using sectors and on the relative strength of the marginal effects on demand for and supply of nontraded final good. We also analyse the effects of changes in different parameters on the supply of skilled labour.     

Distributional Effects of Tariff Reduction in the Transforming Chinese Economy

A general equilibrium trade model is constructed to study the issue of income redistribution between the state sector and the private sector induced by a tariff reduction in the transforming Chinese economy. The analysis is conducted in the presence of price control, tariff protection, and the coexistence of state and private sectors. It is shown that the way in which income levels of the two sectors are affected by the tariff reduction depends on (i) the way in which the price of nontradables is affected, (ii) the degree of privatization, and (iii) the extent of price control.     

Modelling the world wool market: A hybrid approach

We present a model of the world wool market that merges two modelling traditions: the partial-equilibrium commodity-specific approach and the computable-general-equilibrium approach. The model captures the multistage nature of the wool production system, and the heterogeneous nature of raw wool, processed wool and wool garments. It also captures the important wool producing and consuming regions of the world. We illustrate the utility of the model by estimating the effects of tariff barriers on wool products using partial- and general-equilibrium solutions. We find that either solution generates similar wool industry results, whereas the macroeconomic effects differ significantly with the partial-equilibrium estimates significantly overestimating the benefits of the tariff changes.     

Skilled–unskilled wage inequality,product variety,public input and increasing returns: A static general equilibrium analysis

The paper develops a four sector small open economy model with two traded final good sectors, a public intermediate good producing sector and a nontraded good sector producing varieties of intermediate goods. There are three primary factors: capital, skilled labour and unskilled labour. Industrial sector producing a traded good uses capital, intermediate goods and skilled labour as inputs. Intermediate goods producing sector also uses capital and skilled labour. Public input producing sector and the agricultural sector producing the other traded good use capital and unskilled labour as inputs. It is shown that, if production technologies are the same for the agricultural sector and the public input producing sector and if the scale elasticity of output is very low, then an increase in capital stock (unskilled labour endowment) raises (lowers) the skilled–unskilled wage ratio. However, an increase in skilled labour endowment does not produce any unambiguous effect. On the other hand, an increase in the tax rate on industrial output and/or an increase in the price of the agricultural product, armed with the same set of assumptions, lowers the skilled–unskilled wage ratio.     

Monopoly,intermediate goods and the pure theory of international trade

Conclusion In a model with two traded good sectors between which intersectoral flows of intermediate goods are allowed and with a monopolized non-traded good sector, the wage rate in terms of two traded goods increases and the rental of capital in terms of two traded goods decreases when the price of relatively more labor intensive traded good sector increases, though nothing definite can be said about the direction of change in the wage rate and rental in terms of the non-traded good. When prices of traded goods are kept constant and labor and/or capital increase(s), output of the non-traded good sector increases provided that the non-traded good is not inferior, having income elasticity of demand less than unity. The factor intensity condition for the traded goods is in general not sufficient for the validity of the Rybczynski theorem to hold with respect to net outputs of the traded goods. We have derived sufficient conditions for the magnification effect to be observed with respect to net outputs of the traded good sectors. Specifically, we have shown that the factor intensity condition (23) is sufficient for the magnification effect to prevail when only labor increases.     

Local content requirements and urban unemployment

Local content requirements (LCRs) are extensively employed in many developing countries that intend to develop the domestic intermediate good sectors as well as the final good sectors. This article investigates the effects of LCRs on the domestic intermediate-good-producing sector, urban unemployment, and welfare.     

A comparison of specialisation gains from trade in in final and intermediate goods

This paper sets out a method for measuring and comparing the specialisation gains from trade in intermediate goods and final goods, based upon a vertically integrated sectors (VIS) modelling approach. The factor input requirements of domestic production to replace imported intermediates is compared with the factor requirements of the ‘compensating’ exports required to purchase the imports. This method is applied to the UK economy, using a 28 sector model and a breakdown of factor inputs into land, labour and capital. Estimates of net factor-usage or saving on individual factor (weighted for factor quality differences) and multi-factor bases are reported. The results indicate that trade in inputs and outputs was net labour-using, and net-capital and land-saving in 1979. The overall, or multi-factor, gain from trade in intermediates was greater than for trade in final goods in 1979, with overall resource savings of 3·01% and 1·73% respectively.     

减免东盟农产品进口关税对中国宏观经济和产业影响的可计算一般均衡分析

Chingem模型是一个中国静态CGE模型.在Chingem模型的基础上,按照中国与东盟达成的"早期收获方案",模拟2006年减免东盟原六国农产品进口关税对中国宏观经济和产业的短期影响.研究表明,减免东盟六国农产品进口关税有利于我国经济增长,其中经济增长的动力来源于就业水平的提高;国内价格水平会下降,如CPI下降了0.11%;出口增长高于进口增长,贸易顺差有增加的趋势;促进了制造业的发展,其中纺织部门受益最大;羊毛部门受纺织业的拉动产出增长,而其它的农业和服务业部门影响轻微.     

Factor Market Oligopsony and the Production Possibility Frontier

The authors consider a model with two final goods, one intermediate good, and two primary factors. One final good and the intermediate good are produced using primary factors, labor and capital. The other final good is produced using labor and the intermediate input. Producers of the second final good exert oligopsonistic market power on the intermediate input, which captures real world phenomena prevalent in the food processing and other manufacturing industries. If the capital/labor ratio in one final‐good sector is in between those of the intermediate‐input sector and the combined intermediate‐input and the other final‐product sectors, and if the oligopsony power is sufficiently large, the model generates results that are not adherent to the standard two‐sector Heckscher–Ohlin model. Results that deviate from the H–O model include the relationships between factor prices and commodity prices, the price–output effect, tangency between the price line and the PPF, and the curvature of the PPF.     

Oligopsonistic Intermediate Input and Patterns of Trade *

We examine the validities of traditional trade theorems and patterns of trade for an economy with an oligopsonistic intermediate input. Specifically, the model consists of two final goods. one intermediate good, and two primary factors. One final good and the intermediate good are produced using primary factors, capital and labor. The second final good is produced using the intermediate good and labor. All markets operate under perfect competition except the intermediate good market, which is oligopsonistic. This model reflects the real world phenomena of oligopsony power excerted by some industries (e.g., the food processing industry) in the intermediate good purchases. Our analysis shows that some of the traditional trade theorems and H.O trade pattern may be overturned if the factor intensity of the competitive sector lies between those of oligopsony and intermediate good sectors. [F12]     

Incidence theory and the shifting of protection across sectors: the South Asian experience

Using the theoretical framework of a simple general equilibrium model, this paper examines whether strategies aimed at protecting or promoting manufacturing industries indirectly taxed the agricultural and service sectors. A panel data set consisting of five South Asian countries over a 26 year time period is employed in the analysis. Three different estimation procedures are used to account for factors that are country specific and those that are common to all countries. The results indicate that the agricultural sector indirectly felt the brunt of the net protection provided to manufactures due to the ‘shifting of protection’ across sectors. The service sector, on the other hand, indirectly benefited from the general equilibrium spillover effects.     

Why does China protect its labour‐intensive industries more?*

China's tariff structure favours labour‐intensive sectors, and this is at odds with traditional theory of comparative advantage. The paper argues that tariffs in China are a mechanism for protecting technology‐backward domestic – especially state‐owned enterprises (SOEs) from competition technology‐advanced foreign enterprises producing in China. With relatively integrated labour markets and cross‐firm technology differences, SOEs’ subsistence is supported by subsidized credit and limited access of foreign firms’ local production to tariff‐protected domestic markets. Labour market integration and capital subsidies increase the relative cost of labour in SOEs compared to their foreign competitors, hurting more domestic firms in industries that use labour more intensively. Restrictions to FIEs’ (foreign‐invested enterprises) access to tariff‐protected product markets, which protect more labour‐intensive industries, compensate for the greater cost disadvantage of SOEs in labour‐intensive sectors.     

Trade Reform and Informal Wages

When trade reform contracts protected formal sectors in developing countries and the formal workers move to the informal sector for employment, does that reduce informal wages? Using a 2 × 2 Heckscher–Ohlin–Samuelson (HOS) structure with formal–informal production organization for the same commodity, we show that a tariff cut in the import‐competing sector increases both informal wage and employment under very reasonable assumptions. An increase in the price of the export commodity will also increase informal wages, although aggregate informal employment unambiguously falls even if the informal export sector is labor intensive. Furthermore, the formal–informal segmentation of each sector opens up an interesting, hitherto unexplored, possibility that the informal export sector may contract despite a price increase in this sector. Change in the overall size of the export sector is also ambiguous and conditional on the relative strengths of changes in these two segments.     

Urban unemployment and optimal trade policy in a cash-in-advance economy

This paper examines the welfare effects of commercial and tax/subsidy policies on a developing economy with sectoral unemployment and differential cash-in-advance constraints. The optimal tariff can be negative when the cash-in-advance requirement for buying the importable good is larger than that for the exportable good. In addition, when capital is sectorally mobile, production taxes are superior to production subsidies to the importable sector. Nevertheless, to reach the first-best optimum, a uniform wage subsidy to both sectors is required.     

Transport Cost and Tariff Protection of Australian Manufacturing*

This paper provides estimates of transport cost and tariff protection available to import-competing Australian manufacturing industries. It finds that transport costs provide an important component of total protection available to such industries; one which, for many, is more important than the Australian tariff. In view of the effects of protection on industrial structure and performance, it should be explicitly recognized that transport costs are an unavoidable element of the protective structure and are deserving of study in their own right.     

经济结构变化和经济增长

本文试图从生产技术角度构建一个多部门的经济增长模型,同时容纳Kuznets事实和Kaldor事实。模型经济由最终部门和多个中间部门组成,最终产品由各中间产品以CES函数形式生产。各中间部门的技术增长率不同,而这种差异引起经济结构变化,并导致中间产品的相对价格变化,进而决定各中间部门之间要素流动和产值相对份额变动。最终产品的技术增长率为各中间部门的技术增长率加权平均和,并随经济增长单方向变动,变动方向与中间产品之间的替代弹性大小相关。     

经济结构变化和经济增长

本文试图从生产技术角度构建一个多部门的经济增长模型，同时容纳Kuznets事实和Kaldor事实。模型经济由最终部门和多个中间部门组成，最终产品由各中间产品以CES函数形式生产。各中间部门的技术增长率不同，而这种差异引起经济结构变化，并导致中间产品的相对价格变化，进而决定各中间部门之间要素流动和产值相对份额变动。最终产品的技术增长率为各中间部门的技术增长率加权平均和，并随经济增长单方向变动，变动方向与中间产品之间的替代弹性大小相关。     

Competition,taxation and economic growth

The paper mainly examines the relationship between economic growth, tax policy and sectoral labor distribution in an endogenous growth model with expanding varieties. For analyzing these relationships, we consider an economy where three sectors of production are vertically integrated: final goods sector, intermediate goods sector and research sector. We show that the extent of imperfect competition in the intermediate products market affects both economic growth and the allocation of the available labor to all the sectors employing this input. The resources from capital taxation, which are used for financing research sector, have a U-shaped effect on growth and lead to a movement of the labor from research sector to final goods sector. Additionally, we show that if there exists a higher competitive structure in an economy, the probability of the positive effect of an increase in tax on growth gets higher.