Job creation, job destruction, and the international division of labour
AbstractWe incorporate equilibrium unemployment due to imperfect matching into a model of trade in intermediate inputs (Ethier (1982)). Firms are assumed to be price takers and their size is given by technology. Firms enter the market as long as expected profits cover the search cost they incur initially. Trade increases productivity in the final good and then demand for each intermediate input. Steady state unemployment is reduced after trade integration because more vacancies are opened. When the rate of job destruction is made endogenous, international trade reduces the equilibrium rate of jub destruction and this induces an indirect positive effect on job creation. We also show that the more volatile environment faced by firms that is often associated with deeper trade integration is unlikely, per-se, to increase unemployment.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 1998064.
Date of creation: 01 Oct 1998
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Job creation; job destruction; unemployment; international trade; increasing returns.;
Other versions of this item:
- Marion Jansen & Alessandro Turrini, 2004. "Job Creation, Job Destruction, and the International Division of Labor," Review of International Economics, Wiley Blackwell, vol. 12(3), pages 476-494, 08.
- Jansen, Marion & Turrini, Alessandro Antonio, 2000. "Job Creation, Job Destruction, and the International Division of Labour," CEPR Discussion Papers 2472, C.E.P.R. Discussion Papers.
- F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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