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 job 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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2472.
Date of creation: Jun 2000
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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, 1998. "Job creation, job destruction, and the international division of labour," CORE Discussion Papers 1998064, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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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