NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Do Labor Rents Justify Strategic Trade and Industrial Policy?

William T. Dickens

NBER Working Paper No. 5137
Issued in May 1995
NBER Program(s):International Trade and Investment, Labor Studies

Several efficiency wage theories of wage determination have the property that identical workers are more productive in high wage industries and that the promotion of employment in high wage industries can increase GDP (and some measures of welfare). I argue that while policies to favor high wage industries may increase productivity, the effects in developed economies are likely to be very small. This is mainly because the workers who fill the high wage vacancies will come from fairly high wage jobs.

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Document Object Identifier (DOI): 10.3386/w5137

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