The impact of intraindustry trade on the natural rate of unemployment in two simple models
AbstractThis paper builds in two popular versions of the theory of equilibrium unemployment into a world economy engaged purely in intraindustry trade of differentiated products. We show that free trade through increasing the range of varieties available for consumption and expanding economies of scale leads to a lowering of the equilibrium rates of unemployment in all participating countries. Thus, we demonstrate channels through which international trade alleviates the problem of high unemployment in each country engaged in pure intraindustry trade. Copyright Kluwer Academic Publishers 1994
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Bibliographic InfoArticle provided by Springer in its journal Open Economies Review.
Volume (Year): 5 (1994)
Issue (Month): 1 (March)
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Web page: http://www.springerlink.com/link.asp?id=100323
intraindustry trade; scale economies; equilibrium unemployment; shirking behavior; labor turnover;
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