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Comparative Advantage and Skill-Specific Unemployment

  • Larch Mario

    ()

    (University of Bayreuth)

  • Lechthaler Wolfgang

    ()

    (Kiel Institute for the World Economy)

We introduce unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows us to identify three different channels through which trade liberalization can affect unemployment: specialization, changes in productivity, and mobility. These three channels may work in opposite directions and their relative importance depends on the type of trade (intra-industry trade vs. inter-industry trade) and the skill-class of a worker.

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Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (April)
Pages: 1-58

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:23
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