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Global value chains, trade shocks and jobs: An application to Brexit

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  • Hylke Vandenbussche
  • William Connell
  • Wouter Simons

Abstract

Within an open economy framework characterised by vertical linkages in production and search frictions and two-sided heterogeneity in the labour market, raising trade barriers is shown to increase unemployment across skill levels, and to reduce labour market participation and aggregate income. These effects are not necessarily moderated by maintaining frictionless mobility of capital across borders. We find that a flexicurity reform of a liberal welfare state can dampen the adverse effects of de-globalisation.

Suggested Citation

  • Hylke Vandenbussche & William Connell & Wouter Simons, 2020. "Global value chains, trade shocks and jobs: An application to Brexit," Discussion Papers 2020-21, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:2020-21
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    global value chains; trade shocks; jobs; employment; labour markets;
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