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On-the-job-search, wage dispersion and trade liberalization

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  • Joel Rodrigue
  • Kunio Tsuyuhara

Abstract

This paper builds a dynamic, general equilibrium, open economy model that allows for ex ante homogeneous workers to experience different wage growth before and after trade liberalization. Key features of our model include a product market composed of heterogeneous firms and a labour market characterized by directed, on-the-job-search and dynamic contracts. We characterize the complementarity of these two sources of wage dispersion in an open economy setting where trade liberalization affects the endogenous equilibrium set of producers and the structure of wages. We find that worker job-to-job transitions, through on-the-job search, increases the impact of trade liberalization on wage dispersion by 4%.

Suggested Citation

  • 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.
    • Handle: RePEc:cje:issued:v:51:y:2018:i:2:p:452-482
    DOI: 10.1111/caje.12327
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    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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