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The declining costs of international trade and unemployment


  • John Francis


A two-country, two-sector new geography model where workers are imperfectly monitored is used to examine the relationship between falling trade costs and unemployment. It is shown that as trade costs fall over time the world naturally falls into an industrialized core and an agricultural periphery. Globalization has a positive effect on employment in the core in both the short and long term. The periphery suffers employment losses in the short term but can gain in the long term.

Suggested Citation

  • John Francis, 2003. "The declining costs of international trade and unemployment," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 12(4), pages 337-357.
  • Handle: RePEc:taf:jitecd:v:12:y:2003:i:4:p:337-357 DOI: 10.1080/0963819032000154793

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    References listed on IDEAS

    1. Krugman, Paul & Venables, Anthony J., 1996. "Integration, specialization, and adjustment," European Economic Review, Elsevier, vol. 40(3-5), pages 959-967, April.
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    Cited by:

    1. Cédric Loïc Allio, 2016. "Local Labor Markets in a New Economic Geography Model," The Review of Regional Studies, Southern Regional Science Association, vol. 46(1), pages 1-36, Winter.
    2. Philipp vom Berge, 2013. "Search unemployment and new economic geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 731-751, June.
    3. vom Berge, Philipp, 2011. "Search Unemployment and New Economic Geography," University of Regensburg Working Papers in Business, Economics and Management Information Systems 454, University of Regensburg, Department of Economics.
    4. John Francis, 2009. "Agglomeration, job flows and unemployment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 181-198, March.


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