Social structures, labor costs, and North American economic integration: A comparative modeling analysis

This project examines the theoretical assumptions underlying alternative models of international economic integration, and explores the implications of these contrasting assumptions for trade, labor market, and macroeconomic policy in the North American context. The traditional neoclassical model is shown to rely centrally on a view of factor markets as self-adjusting and supply-constrained, in which income distribution is directly dependent on the productivity of factors. In an alternative, "structuralist" conception, the nature of socio-economic institutions is accepted as a central determinant of both income distribution and capital accumulation; as a consequence, the economy in general is demand-constrained, not supply-constrained. Part One of the dissertation explores the consequences of these assumptions for the predicted effects of international commodity trade, investment flows, and labor mobility, with the use of theoretical and numerical general equilibrium systems. Part Two explores the empirical dimensions of the comparative models, through the estimation and simulation of competing neoclassical and structuralist simultaneous-equation macroeconometric models of the Canadian economy. Wide-ranging empirical support is found for structuralist hypotheses regarding the impact of socio-economic institutions on labor costs, investment, and trade flows in an open-economy setting. Finally, the models constructed in both parts of the dissertation are utilized to explore the implications of the structuralist approach for understanding recent policy initiatives promoting North American economic integration.