Trade, labour force growth and wages

This paper explores the transmission of demographic pressure between open economies. The implications of labour farce growth for wages, employment, and production patterns are formally examined. These issues are explored theoretically in a formal dual trade model incorporating features of both standard factor-based trade models and models of two-way trade based on product differentiation and returns to specialisation. Sufficient conditions for positive trade linkages between labour force growth in one region and real wage erosion in another are derived. These conditions are then examined numerically in the context of projected non-OECD labour force growth.