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International Trade and Unemployment – the Worker-Selection Effect
This paper analyzes how trade liberalization influences the unemploy- ment rate of workers with di¤erent abilities. We refine the Melitz (2003) framework to account for trade unions and heterogeneous workers, who di¤er with respect to their abilities. Our main findings are: (i) high- ability wor...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 27-2011) |
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| Main Authors: | , |
| Format: | Work |
| Language: | English |
| Published: |
2011
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | This paper analyzes how trade liberalization influences the unemploy-
ment rate of workers with di¤erent abilities. We refine the Melitz (2003)
framework to account for trade unions and heterogeneous workers, who
di¤er with respect to their abilities. Our main findings are: (i) high-
ability 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 lib-
eralization leads to a rise in aggregate unemployment. In this case, trade liberalization may harm a country's welfare. |
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| Physical Description: | 32 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0093 |