Spot market wages,implicit contracts and technological change: skill-level evidence from Finland

This article investigates the relevance of the theories of implicit contracts and spot market model to the skill-level wages in Finland. We use linked worker-firm panel data over the period from 1991 to 2004, which included major institutional and technological changes. We find similar patterns in the wage flexibility of primary and highly educated workers: their wages increased with the decreasing spot market unemployment rate after the EU membership still exhibiting some weak backward linkages. The wages of the secondary-educated did not follow the decreasing spot market unemployment, but instead some signs of the full commitment risk sharing were found.     

Endogenous trade policy in general equilibrium: An interaction of redistribution rule,trade openness,and labor market condition

Using a general equilibrium framework, the paper derives trade policy endogenously for a small country. It shows that, contrary to the existing literature, a lobbying industry is not guaranteed trade protection; it may even face trade taxes. Besides lobbying, trade policy depends on other factors such as the trade revenue distribution rule, income distribution across groups, trade openness, factor substitutability in production, industry employment size, and labor market flexibility. The paper also shows that the observed phenomenon of government preference for import tariffs over export subsidies—a long overdue puzzle—is an inherent outcome of lobbying equilibrium. It also shows that trade policies such as import tariffs and export taxes that have the same impact on economic market—Lerner symmetry (1936)—are driven by the same forces in the political market.