Declining high-wage industries and structural adjustment policy
|Title:||Declining high-wage industries and structural adjustment policy||Authors:||Barry, Frank||Permanent link:||http://hdl.handle.net/10197/1464||Date:||Apr-1989||Abstract:||In this paper a sector-specific disturbance generates unemployment that co-exists with relatively high wages in the adversely-affected industry. Previous analyses have interpreted this unemployment as "classical" in nature, assuming it to be caused by arbitrary wage rigidities, and have concluded that some degree of subsidization of the contracting sector is warranted on efficiency grounds. The present paper proposes an alternative "structural" explanation in which the privately-optimal response of workers and firms within a unionised high-wage industry leads to inefficiently low levels of labour transfer and a correspondingly high rate of sectoral unemployment. Subsidisation of the declining industry under these circumstances reduces efficiency. Several policies capable of achieving the optimal allocation of labour are explored, and the associated tax costs and income distributional effects analysed.||Type of material:||Working Paper||Publisher:||University College Dublin. School of Economics||Subject LCSH:||Unemployment--Effect of wages on
Structural adjustment (Economic policy)
|Language:||en||Status of Item:||Not peer reviewed|
|Appears in Collections:||Economics Working Papers & Policy Papers|
Show full item record
Page view(s) 20145
This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.