Helpman, Elhanan, Itshoki, Oleg and Redding, Stephen (2009) Inequality and unemployment in a global economy. CEP Discussion Papers, 940. Centre for Economic Performance, London School of Economics and Political Science, London, UK.
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Abstract
This paper develops a new framework for examining the distributional consequences of international trade that incorporates firm and worker heterogeneity, search and matching frictions in the labor market, and screening of workers by firms. Larger firms pay higher wages and exporters pay higher wages than non-exporters. The opening of trade enhances wage inequality and raises unemployment, but expected welfare gains are ensured if workers are risk neutral. And while wage inequality is larger in a trade equilibrium than in autarky, reductions of trade impediments can either raise or reduce wage inequality.
| Item Type: | Monograph (Discussion Paper) |
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| Official URL: | http://cep.lse.ac.uk/_new/publications/series.asp?... |
| Additional Information: | © 2009 the authors |
| Library of Congress subject classification: | H Social Sciences > HC Economic History and Conditions |
| Journal of Economic Literature Classification System: | E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Employment, and Investment > E24 - Macroeconomics: Employment; Unemployment; Wages; Intergenerational Income Distribution (includes wage indexation) F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies |
| Sets: | Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP) Departments > Economics |
| Rights: | http://www.lse.ac.uk/library/rights/LSERO.htm |
| Identification Number: | 940 |
| URL: | http://eprints.lse.ac.uk/25501/ |
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