Delay and dynamics in labor market adjustment: Simulation results
AbstractWe simulate numerically a trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. Adjustment to a trade shock can be slow with plausible parameter values. In our base case, the economy moves 95% of the distance to the new steady state in approximately eight years. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build - or destroy - a constituency for free trade. We study the conditions under which these contrasting outcomes occur.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of International Economics.
Volume (Year): 75 (2008)
Issue (Month): 1 (May)
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Web page: http://www.elsevier.com/locate/inca/505552
Labor mobility Gross flows Net flows Gradualism Trade shocks Trade liberalization;
Other versions of this item:
- Shubham Chaudhuri & Erhan Artuç & John McLaren, 2003. "Delay and dynamics in labor market adjustment: Simulation results," Discussion Papers 0304-07, Columbia University, Department of Economics.
- Erhan Artuç & Shubham Chaudhuri & John McLaren, 2007. "Delay and Dynamics in Labor Market Adjustment: Simulation Results," KoÃ§ University-TUSIAD Economic Research Forum Working Papers 0703, Koc University-TUSIAD Economic Research Forum.
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
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