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Title:International trade and unemployment: The worker-selection effect PDF Logo
Authors:de Pinto, Marco
Michaelis, Jochen
Issue Date:2011
Series/Report no.:Joint discussion paper series in economics 27-2011
Abstract:This paper analyzes how trade liberalization influences the unemployment rate of workers with different abilities. We refine the Melitz (2003) framework to account for trade unions and heterogeneous workers, who differ with respect to their abilities. Our main findings are: (i) highability workers profit from trade liberalization in terms of higher wages and higher employment; (ii) the least efficient workers loose their job and switch to long-term unemployment (worker-selection effect); (iii) if a country is endowed with a large fraction of low-skilled workers, trade liberalization leads to a rise in aggregate unemployment. In this case, trade liberalization may harm a country's welfare.
Subjects:trade liberalization
trade unions
skill-specific unemployment
JEL:F1
F16
J5
Document Type:Working Paper
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

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