Employment Protection, International Specialization, and Innovation

Universitat Pompeu Fabra Economics Working Paper No. 256

Posted: 4 Nov 1997

See all articles by Gilles Saint-Paul

Gilles Saint-Paul

University of Toulouse I - GREMAQ-IDEI; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

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Abstract

We develop a model to analyze the implications of firing costs on incentives for R&D and international specialization. The Key idea is paying the firing cost, the country with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Under international trade, an international product cycle emerges where, roughly, new goods are first produced in the low firing cost country which will specialize in "secondary innovations," that is, improvements in existing goods, while the low firing cost country will specialize more in "primary innovation," that is, invention of new goods.

JEL Classification: F12, F17, J21, J32, O3

Suggested Citation

Saint-Paul, Gilles, Employment Protection, International Specialization, and Innovation. Universitat Pompeu Fabra Economics Working Paper No. 256. Available at SSRN: https://ssrn.com/abstract=60193

Gilles Saint-Paul (Contact Author)

University of Toulouse I - GREMAQ-IDEI ( email )

Manufacture des Tabacs
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Toulouse, 31000
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+33 5 6112 8544 (Phone)
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Centre for Economic Policy Research (CEPR)

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United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
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