01856cas a2200241 a 4500 AALejournalIMF000216 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451843354 1018-5941 BD-DhAAL BD-DhAAL Saint-Paul, Gilles. Employment Protection, International Specialization, and innovation / Gilles Saint-Paul. Washington, D.C. : International Monetary Fund, 1996. 1 online resource (24 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We develop a model to analyze the implications of firing costs on incentives for R and D and international specialization. The key idea is that, to avoid paying firing costs, the country with a rigid labor market will tend to produce relatively secure goods, at a late stage of their product life cycle. Under international trade, an international product cycle emerges where, roughly, new goods are first produced in the low firing cost country and then move to the high firing cost country. We show that in the closed economy, an increase in firing costs does not necessarily imply a reduction in R and D; it crucially depends on the riskiness of R and D activity relative to production activity. In the open economy, however, an increase in firing cost is much more likely to reduce R and D intensity. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1996/016 Full text available on IMF http://elibrary.imf.org/view/journals/001/1996/016/001.1996.issue-016-en.xml IMF e-Library