Year: 2020
Type: article
Abstract: We embed a model of the labour market with sector-specific search-and-matching frictions into a Ricardian model with a continuum of goods to show that trade reduces unemployment in countries with comparative advantage in sectors with more efficient labour markets and leads to higher unemployment in countries with comparative advantage in sectors with less efficient labour markets. We test this prediction in a panel dataset of 107 countries covering the period 1995–2009 and find that the data support this theoretical prediction. Our results also help reconcile the apparently contradicting evidence in the empirical literature on the impact of trade on unemployment.
Source: European Economic Review
Language: English
Topic: Global trade and economics
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,690
OpenAlex ID: W3036289458