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Inequality and unemployment in a global economy

Helpman, Elhanan and 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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Identification Number: 940

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)
Official URL: http://cep.lse.ac.uk/_new/publications/series.asp?...
Additional Information: © 2009 the authors
Subjects: H Social Sciences > HC Economic History and Conditions
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Series: Working Papers > CEP Discussion Papers
Date Deposited: 14 Oct 2009 14:03
Last Modified: 14 Nov 2012 10:19
URI: http://eprints.lse.ac.uk/id/eprint/25501

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