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Comparative Advantage and Unemployment

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  • Mark Bils
  • Yongsung Chang
  • Sun-Bin Kim

Abstract

We model unemployment allowing workers to differ by comparative advantage in market work. Workers with comparative advantage are identified by who works more hours when employed. This enables us to test the model by grouping workers based on their long-term wages and hours from panel data. The model captures the greater cyclicality of employment for workers with low comparative advantage. But the model fails to explain the magnitude of countercyclical separations for high-wage workers or the magnitude of procyclical findings for high-hours workers. As a result, it only captures the cyclicality of the extensive, employment margin for low-wage, low-hours workers.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15030.

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Date of creation: Jun 2009
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Handle: RePEc:nbr:nberwo:15030

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Cited by:
  1. Mueller, Andreas I., 2012. "Separations, Sorting and Cyclical Unemployment," IZA Discussion Papers 6849, Institute for the Study of Labor (IZA).
  2. Makoto Nakajima, 2010. "Business cycles in the equilibrium model of labor market search and self-insurance," Working Papers 10-24, Federal Reserve Bank of Philadelphia.
  3. Andrés Erosa & Luisa Fuster & Gueorgui Kambourov, 2011. "Towards a micro-founded theory of aggregate labor supply," Working Papers 2011-13, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales, revised 23 Nov 2011.
  4. José Mustre-del-Río, 2011. "The aggregate implications of individual labor supply heterogeneity," Research Working Paper RWP 11-09, Federal Reserve Bank of Kansas City.
  5. Michael Dotsey & Wenli Li & Fang Yang, 2010. "Consumption and time use over the life cycle," Working Papers 10-37, Federal Reserve Bank of Philadelphia.
  6. Andri Chassamboulli, 2010. "Labor-market Volatility in a Matching Model with Worker Heterogeneity and Endogenous Separations," University of Cyprus Working Papers in Economics 13-2010, University of Cyprus Department of Economics.

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