Wage subsidies and international trade: When does policy coordination pay?

Sebastian Braun, Christian Spielmann*

*Corresponding author for this work

    Research output: Contribution to journalArticlepeer-review


    National labour market institutions interact across national boundaries when product markets are global. Labour market policies can thus entail spill-overs, which suggest that there are benefits from international policy coordination. This paper studies the effects of wage subsidies in an international duopoly model with unionized labour markets. The authors document both positive and negative spill-over effects and discuss the benefits and costs from international policy coordination both for the case of symmetric and asymmetric labour market institutions. The results suggest that institutional differences could sign responsible for the slow speed at which labour market policy coordination has progressed so far.

    Original languageEnglish
    Article number2012-30
    Pages (from-to)1
    Number of pages42
    JournalEconomics: The Open-Access, Open-Assessment E-Journal
    Publication statusPublished - 2012


    • Asymmetric labour market institutions
    • International policy coordination
    • Policy spill-overs
    • Trade
    • Unionized labour markets
    • Wage subsidies


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