This paper shows that in the Baltic countries, commuting reduces urban- rural wage and employment disparities and increases national output. To quantify the effect of commuting on wage differentials, two sets of earnings functions are estimated (based on Estonian, Latvian, and Lithuanian Labor...

Do employers and workers underbid prevailing wages if there is unemployment? Do employers take advantage of workers’ underbidding by lowering wages? We hypothesize that under conditions of incomplete labor contracts wage levels may positively affect workers’ propensity to cooperate. This, in...

This paper investigates the relationship between bilateral FDI positions and cross-country business cycle correlations in the period 1982–2001. We find that countries that have comparatively intensive FDI relations also have more synchronized business cycles during 1995–2001. Before 1995, we...

The Indonesian labour market is characterised by widespread informality. To some extent, these outcomes can be attributed to a sharp increase in the real value of the minimum wage since 2001, when minimum-wage setting was decentralised to the provincial governments. To test this hypothesis, this...

Foreign-owned firms account for a significant part of output in many industrialized countries. However, compared to international trade linkages, relatively little is known about the role of foreign direct investment linkages and multinational firm behavior in the transmission of disturbances...

High levels of unemployment and rising social charges have lead to considerable pressure on labour markets to adjust. Major steps in labour market reform have been implemented over the last three years. These need to be followed up in several respects in order to raise the economy’s capacity...