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Title:Comparative advantage and skill-specific unemployment PDF Logo
Authors:Larch , Mario
Lechthaler, Wolfgang
Issue Date:2009
Series/Report no.:CESifo working paper 2754
Abstract:We introduce unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows us to study the distributional consequences and the skill-specific unemployment effects of trade liberalization. We show that the gains from trade will be distributed very unequally. While unskilled workers loose in terms of real wages and employment levels in the skilled labor intensive sector, skilled workers loose in terms of real wages and unemployment levels in the unskilled labor intensive sector. However, the inequality of workers between sectors is much larger for skilled labor than for unskilled labor. On average, unemployment among unskilled workers increases when a skill-abundant country opens up to trade.
Subjects:comparative advantage
heterogeneous firms
labor market frictions
unemployment
trade liberalization
JEL:F11
F12
F16
J64
L11
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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