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Inequality And International Trade: The Role Of Skill-Biased Technology And Search Frictions

Author

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  • Ritter, Moritz

Abstract

I embed a competitive search model of the labor market into a small open economy model with heterogeneous firms and workers. Search frictions generate equilibrium unemployment and income inequality between identical workers, in addition to income differences between skill groups. A quantitative evaluation of the U.S. trade experience suggests that the effect of the increase in goods trade since 1980 may have contributed to the increase in the college premium, but not to the increase in residual inequality.

Suggested Citation

  • Ritter, Moritz, 2017. "Inequality And International Trade: The Role Of Skill-Biased Technology And Search Frictions," Macroeconomic Dynamics, Cambridge University Press, vol. 21(3), pages 624-643, April.
    • Handle: RePEc:cup:macdyn:v:21:y:2017:i:03:p:624-643_00
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    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • 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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