Helpman, Elhanan, Itshoki, Oleg and Redding, Stephen (2009) Inequality and unemployment in a global economy. CEP Discussion Papers (940). London School of Economics and Political Science. Centre for Economic Performance, 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 |
| Divisions: | Centre for Economic Performance Economics |
| Subjects: | H Social Sciences > HC Economic History and Conditions |
| JEL classification: | 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 |
| Date Deposited: | 14 Oct 2009 14:03 |
| Last Modified: | 15 Sep 2023 23:16 |
| URI: | http://eprints.lse.ac.uk/id/eprint/25501 |
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