International Trade, the Division of Labor, and Unemployment
The author merges a model of monopolistic competition in the production of intermediate goods with the Shapiro-Stiglitz model of efficiency wages to show that the introduction of international trade leads to increased employment in both countries. The intuition is that trade results in a greater division of labor due to the increased variety of available intermediates. The resulting increase in productivity yields higher real wages, thus relaxing the efficiency-wage constraint and permitting an increase in employment. The increase in employment then magnifies the benefits of trade. Similar reasoning applies even when unemployment is generated from other processes. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 37 (1996)
Issue (Month): 1 (February)
|Contact details of provider:|| Postal: |
Phone: (215) 898-8487
Fax: (215) 573-2057
Web page: http://www.econ.upenn.edu/ier
More information through EDIRC
|Order Information:|| Web: http://www.blackwellpublishing.com/subs.asp?ref=0020-6598 Email: |
When requesting a correction, please mention this item's handle: RePEc:ier:iecrev:v:37:y:1996:i:1:p:71-84. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or ()
If references are entirely missing, you can add them using this form.