Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy

Trade, Capital Accumulation and Structural Unemployment: An Empirical Study of the Singapore Economy

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-trada...

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Bibliographic Details
Main Authors: KEE, Hiau Looi, HOON, Hian Teck
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2004
Subjects:
Endogenous natural rate of unemployment
Wage bargaining
Specific-factors model
Stolper-Samuelson effect
Rybczynski effect
Asian Studies
International Economics
Labor Economics
Online Access:https://ink.library.smu.edu.sg/soe_research/1196
https://ink.library.smu.edu.sg/context/soe_research/article/2195/viewcontent/KeeHoon_jde.pdf
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Institution: Singapore Management University
Language: English
Description
Summary: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.

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