Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy
Publication Type
Journal Article
Version
submittedVersion
Publication Date
6-2005
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 | Growth and Development | Labor Economics
Research Areas
Applied Microeconomics
Publication
Journal of Development Economics
Volume
77
Issue
1
First Page
125
Last Page
152
ISSN
0304-3878
Identifier
10.1016/j.jdeveco.2004.03.003
Publisher
Elsevier
Citation
KEE, Hiau Looi and HOON, Hian Teck.
Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy. (2005). Journal of Development Economics. 77, (1), 125-152.
Available at: https://ink.library.smu.edu.sg/soe_research/1198
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.
Additional URL
https://doi.org/10.1016/j.jdeveco.2004.03.003