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International trade and directed search unemployment in general equilibrium

Author

Listed:
  • Ian King
  • Frank Stähler

Abstract

We develop an open economy general equilibrium model, with auctionbased directed search unemployment, to study the interactions of trade and unemployment. The theory ascribes all outcomes purely to the fundamentals of technology and endowment. If countries differ by endowment , trade makes both the unemployment rate and the rental in the capital(labour) abundant country rise (decline) but does not lead to equalization. If, alternatively, countries differ by technology , trade increases (decreases) the unemployment rate in the country whose technology is relatively superior (inferior) for producing the capitalintensive good.

Suggested Citation

  • Ian King & Frank Stähler, 2014. "International trade and directed search unemployment in general equilibrium," Canadian Journal of Economics, Canadian Economics Association, vol. 47(2), pages 580-604, May.
    • Handle: RePEc:cje:issued:v:47:y:2014:i:2:p:580-604
    DOI: 10.1111/caje.12082
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    Cited by:

    1. Richard Chisik & Julian Emami Namini, 2019. "International Trade And Labor‐Market Discrimination," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 353-371, January.
    2. Joel Rodrigue & Kunio Tsuyuhara, 2018. "On-the-job-search, wage dispersion and trade liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 51(2), pages 452-482, May.

    More about this item

    JEL classification:

    • 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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