Publication Type

Journal Article

Publication Date

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

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://dx.doi.org/10.1016/j.jdeveco.2004.03.003

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