Must Improved Labor Standards Hurt Accumulation in the Targeted Sector? Stylized Analysis of a Developing Economy

Authors

Arslan Razmi, University of Massachusetts - Amherst

Working Paper Number

2009-09

Publication Date

2009

Abstract

This paper analyzes a stylized small open economy. The analysis classifies the economy into two tradable output-producing sectors: a manufacturing sector and a (mainly tourism-related) services sector. Assuming sectoral differences based on stylized facts, we explore the impact of higher labor standards in the manufacturing sector on the long-term prospects of the economy using comparative dynamic exercises to analyze changes in output, foreign direct investment, relative prices, sectoral distribution, and accumulation. We find, in particular, that imposing higher standards across the manufacturing sector could, in the long run, shift the structure of the domestic economy in favor of that sector.

DOI

https://doi.org/10.7275/1066738

Recommended Citation

Razmi, Arslan, "Must Improved Labor Standards Hurt Accumulation in the Targeted Sector? Stylized Analysis of a Developing Economy" (2009). Economics Department Working Paper Series. 6.
https://doi.org/10.7275/1066738