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ID 35234
file
creator
subject
Capital market integration
Unemployment risk
Labor market policies
Tax competition
JEL Classification Numbers: F21
JEL Classification Numbers: F66
JEL Classification Numbers: H26
JEL Classification Numbers: J63
JEL Classification Numbers: J65
NDC
Social science
abstract
This study analyzes the effect of capital markets integration on labor market policies. To that end, it incorporates imperfect labor markets into a tax competition model. There exist two types of households, types 1 and 2, that are risk-averse. Each type of household is endowed with one unit of a worker. Additionally, households are endowed with capital. Type 2 households own lager amounts of capital than type 1 households. The government can choose the following policies: unemployment benefits and layoff, payroll, and capital subsidies or taxes. When capital markets are integrated, households can invest their capital in foreign capital markets. This study shows that the integration of capital markets leads to ine¢ cient policies under which labor productivity is high, but income inequality within a country and the risk of job loss are also high. As a result, the social welfare of each country in integrated capital markets is lower than in non-integrated capital markets.
journal title
IDEC DP2 Series
volume
Volume 3
issue
Issue 9
start page
1
end page
25
date of issued
2013-12
publisher
広島大学大学院国際協力研究科
SelfDOI
language
eng
nii type
Departmental Bulletin Paper
HU type
Departmental Bulletin Papers
DCMI type
text
format
application/pdf
text version
publisher
department
Graduate School for International Development and Cooperation
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