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Employment allocations and unemployment: The role of international trade and migration frictions

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  • Xin Wang

Abstract

Understanding the drivers of structural change has long been a central objective in development economics. While quantitative models that integrate multiple mechanisms into a unified framework offer valuable insights into their relative importance, this paper offers an alternative empirical perspective by highlighting and comparing the distinct impacts that different mechanisms have on other dimensions of labour market outcomes. Specifically, it examines two key forces behind labour reallocation out of agriculture: international trade and reductions in intersectoral allocation frictions. The paper shows, both theoretically and empirically, that these forces have opposite effects on unemployment. It further emphasizes that the reallocation of market shares toward more productive firms is a crucial mechanism behind the impact of trade. Allocation de la main‐d'œuvre et chômage : le rôle des frictions commerciales et migratoires. La compréhension des moteurs du changement structurel constitue depuis longtemps un objectif central de l'économie du développement. Bien que les modèles quantitatifs intégrant plusieurs mécanismes dans un cadre unifié fournissent un éclairage précieux sur leur importance relative, cet article propose une perspective empirique alternative en mettant en évidence et en comparant les effets différenciés de ces mécanismes sur d'autres dimensions du marché du travail. Il examine en particulier deux forces majeures à l'origine de la réallocation de la main‐d'œuvre hors du secteur agricole : le commerce international et la réduction des frictions d'allocation intersectorielle. L'article montre, sur les plans théorique et empirique, que ces deux forces ont des effets opposés sur le chômage. Il souligne en outre que la réallocation des parts de marché en faveur des entreprises les plus productives constitue un mécanisme clé dans l'incidence du commerce.

Suggested Citation

  • Xin Wang, 2026. "Employment allocations and unemployment: The role of international trade and migration frictions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 59(1), pages 208-238, February.
  • Handle: RePEc:wly:canjec:v:59:y:2026:i:1:p:208-238
    DOI: 10.1111/caje.70043
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