Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy
Publication Type
Working Paper
Version
publishedVersion
Publication Date
3-2004
Abstract
This paper studies the factors responsible for the secular decline of Singapore’s unemployment rate over the period 1966-2000 in an environment of low and stable inflation rates. We introduce wage bargaining and unions into a specific-factors, two-sector economy with an export sector and a non-tradable sector to obtain an endogenous natural unemployment rate. Increases in the relative export price and capital stock in the export sector are predicted to reduce structural unemployment. These hypotheses could not be rejected based on structural estimations and co-integration regressions. Empirically, capital accumulation in the export sector explains most of the decline in Singapore’s unemployment rate.
Keywords
Endogenous natural rate of unemployment, Wage bargaining, Specific-factors model, Stolper-Samuelson effect, Rybczynski effect
Discipline
Asian Studies | International Economics | Labor Economics
Research Areas
Macroeconomics
First Page
1
Last Page
35
Publisher
SMU Economics and Statistics Working Paper Series, No. 06-2004
City or Country
Singapore
Citation
KEE, Hiau Looi and HOON, Hian Teck.
Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy. (2004). 1-35.
Available at: https://ink.library.smu.edu.sg/soe_research/1196
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Comments
Published in Journal of Development Economics, 2005, https://doi.org/10.1016/j.jdeveco.2004.03.003