Journal article
Labour supply, foreign investment and welfare in the presence of public infrastructure
Economic Modelling, Vol.25(5), pp.959-967
2008
Abstract
Within the context of a small open economy where both foreign investment and the provision of public infrastructure are endogenous, this paper examines the impact of an exogenous increase in labour supply. An increase in labour supply can be attributed to labour inflow. A number of empirical studies have demonstrated the importance of public infrastructure in real economies and both developed and developing countries have attracted significant foreign investment in recent years. This paper shows that, in the case of a diversified equilibrium, variations in labour supply do not affect the wage rate, provision of public infrastructure or welfare. However, an increase in labour supply decreases foreign investment as long as the producers of the private goods derive equal benefits from public infrastructure. In the case of complete specialisation, an increase in labour supply increases the provision of public infrastructure, which leads to an increase in the wage rate and foreign investment. An increase in labour supply increases welfare as long as the provision of public infrastructure involves some fixed cost.
Details
- Title
- Labour supply, foreign investment and welfare in the presence of public infrastructure
- Authors
- Sajid Anwar (Author) - University of South Australia
- Publication details
- Economic Modelling, Vol.25(5), pp.959-967
- Publisher
- Elsevier BV, North-Holland
- Date published
- 2008
- DOI
- 10.1016/j.econmod.2008.01.001
- ISSN
- 0264-9993
- Organisation Unit
- School of Business and Creative Industries; Indigenous and Transcultural Research Centre; University of the Sunshine Coast, Queensland; USC Business School - Legacy
- Language
- English
- Record Identifier
- 99449513202621
- Output Type
- Journal article
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