Protection, Employment and Welfare in a ‘Stagflating’ Economy

  • Jean Waelbroeck
Part of the International Economic Association Series book series (IEA)


This paper examines the impact of protection in an economy in which production is held back by a rigid real wage that exceeds the level at which the labour market clears. The supply of labour exceeds the producers’ demand; workers are ‘rationed on the labour market’, to use the terminology of fixed price equilibrium theory. Prices are flexible, and goods markets clear without a need to constrain supply or demand.


Wage Rate Real Wage Labour Demand Unemployment Benefit Nominal Wage 
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    See, for example, W. Godley and T. E. Cripps, ‘Formal Analysis of the Cambridge Economic Policy Group Model’, Economica, 43 (172) (November 1976), 335–48.CrossRefGoogle Scholar
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    See, for example, R. E. Caves, ‘Economic Models of Political Choice: Canada’s Tariff Structure’, Canadian Journal of Economics, 9 (2) (May 1976), 278–300.CrossRefGoogle Scholar
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    R. Barro, ‘Comment on “Unemployment, Employment, and Exports in British Manufacturing, a Non-Market Clearing Approach”’, by G. Muellbauer and D. Winter, European Economic Review (May 1980).Google Scholar
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    See R. E. Caves, ‘Economic Models of Political Choice: Canada’s Tariff Structure’, Canadian Journal of Economics (May 1976), 278–300;Google Scholar
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    J. H. Drèze and F. Modigliani, ‘The Tradeoff between Real Wages and Employment in an Open Economy (Belgium)’, European Economic Review, 15 (1) (January 1981), 1–40.CrossRefGoogle Scholar

Copyright information

© International Economic Association 1983

Authors and Affiliations

  • Jean Waelbroeck
    • 1
  1. 1.Belgium

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