| This paper studies the impact of trade on
the price-elasticity of aggregate labour demand. The analysis is based on the
idea that a variation in the cost of (a given type of) labour has an effect on
the sectoral trade specialisation of an economy, at the expense of the domestic
productions using this factor intensively. This is true even when the trade is
balanced. As this effect is more important the more open the economy, trade openness
induces an increase in the associated labour-demand elasticity, at least if the
country has a comparative disadvantage in the industries using intensively the
type of labour considered. This argument is illustrated by a simple model, using
the Armington hypothesis, with an empirical assessment for France |
Abstract |
