IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Entrepreneurs, Jobs, and Trade

We propose a simple theory of personal income distribution, equilibrium unemployment, and interindustry trade, in which product markets are perfectly competitive and labor markets exhibit search related frictions. Individuals, based on their managerial talent, choose to become self-employed entrepreneurs and acquire more managerial capital, or they become workers and face the prospect of unemployment. We analyze the effects of trade on a small-open jobless economy and a two-country global economy. In the case of a small-open economy, improvements in international competitiveness raise the possibility of immiserizing recessions with higher unemployment, lower GDP, and lower aggregate welfare. Reductions in the costs of acquiring managerial capital or appropriate job-vacancy subsidies generally lead to lower unemployment rate, higher aggregate welfare, and higher income inequality. In a two-country global economy, a country exports the good with lower labor-market frictions or lower costs of managerial capital acquisition. Unilateral job-creating policies have asymmetric effects on income inequality and unemployment across countries, and ambiguous effects on welfare in each country.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://bus.lsu.edu/McMillin/Working_Papers/pap13_04.pdf
Download Restriction: no

Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2013-04.

as
in new window

Length:
Date of creation:
Date of revision:
Handle: RePEc:lsu:lsuwpp:2013-04
Contact details of provider: Postal:
Baton Rouge, LA 70803-6306

Fax: 225-578-3807
Web page: http://www.business.lsu.edu/economics
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Helpman, Elhanan & Itskhoki, Oleg, 2010. "Labour Market Rigidities, Trade and Unemployment," Scholarly Articles 25586655, Harvard University Department of Economics.
  2. Nick Bloom & John Van Reenen, 2010. "Why do Management Practices Differ Across Firms and Countries?," CEP Occasional Papers 26, Centre for Economic Performance, LSE.
  3. Olivier Blanchard & Jordi Gali, 2008. "Labor Markets and Monetary Policy: A New-Keynesian Model with Unemployment," NBER Working Papers 13897, National Bureau of Economic Research, Inc.
  4. Helpman, Elhanan & Itskhoki, Oleg & Redding, Stephen, 2010. "Inequality and Unemployment in a Global Economy," Scholarly Articles 25586656, Harvard University Department of Economics.
  5. Gita Gopinath & Brent Neiman, 2011. "Trade adjustment and productivity in large crises," Working Papers 11-9, Federal Reserve Bank of Boston.
  6. Lars A. Stole & Jeffrey Zwiebel, 1996. "Intra-firm Bargaining under Non-binding Contracts," Review of Economic Studies, Oxford University Press, vol. 63(3), pages 375-410.
  7. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
  8. José A. Carrasco‐Gallego, 2012. "The Marshall Plan and the Spanish postwar economy: a welfare loss analysis," Economic History Review, Economic History Society, vol. 65(1), pages 91-119, 02.
  9. Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2009. "Trade and Unemployment: What Do the Data Say?," IZA Discussion Papers 4184, Institute for the Study of Labor (IZA).
  10. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
  11. Felbermayr, Gabriel & Prat, Julien & Schmerer, Hans-Jörg, 2008. "Globalization and Labor Market Outcomes: Wage Bargaining, Search Frictions, and Firm Heterogeneity," IZA Discussion Papers 3363, Institute for the Study of Labor (IZA).
  12. Monte, Ferdinando, 2009. "Skill Bias, Trade, and Wage Dispersion," MPRA Paper 14719, University Library of Munich, Germany.
  13. Paolo Manasse & Alessandro Turrini, . "Trade, Wages and "Superstars"," Working Papers 140, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  14. Nicola Gennaioli & Rafael Laporta & Florencio López-de-Silanes & Andrei Schleifer, 2011. "Human capital and regional development," Economics Working Papers 1286, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2012.
  15. Hartmut Egger & Udo Kreickemeier, . "Fairness, Trade, and Inequality," Discussion Papers 08/19, University of Nottingham, GEP.
  16. Unel Bulent, 2015. "Human Capital Formation and International Trade," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1067-1092, July.
  17. Hartmut Egger & Udo Kreickemeier, 2009. "Firm Heterogeneity And The Labor Market Effects Of Trade Liberalization," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 187-216, 02.
  18. Donald R. Davis, 1996. "Technology, Unemployment, and Relative Wages in a Global Economy," NBER Working Papers 5636, National Bureau of Economic Research, Inc.
  19. Felbermayr, Gabriel & Larch, Mario & Lechthaler, Wolfgang, 2012. "Unemployment in an interdependent world," Kiel Working Papers 1540 [rev.], Kiel Institute for the World Economy (IfW).
  20. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Juan Botero, 2003. "The Regulation of Labor," NBER Working Papers 9756, National Bureau of Economic Research, Inc.
  21. Dutt, Pushan & Mitra, Devashish & Ranjan, Priya, 2009. "International trade and unemployment: Theory and cross-national evidence," Journal of International Economics, Elsevier, vol. 78(1), pages 32-44, June.
  22. Gita Gopinath & Oleg Itskhoki & Brent Neiman, 2011. "Trade Prices and the Global Trade Collapse of 2008-2009," NBER Working Papers 17594, National Bureau of Economic Research, Inc.
  23. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1988. "The Structure of Simple General Equilibrium Models with Frictional Unemployment," Journal of Political Economy, University of Chicago Press, vol. 96(6), pages 1267-93, December.
  24. Zvi Griliches, 1998. "Issues in Assessing the Contribution of Research and Development to Productivity Growth," NBER Chapters, in: R&D and Productivity: The Econometric Evidence, pages 17-45 National Bureau of Economic Research, Inc.
  25. Davis, Donald R, 1998. "Does European Unemployment Prop Up American Wages? National Labor Markets and Global Trade," American Economic Review, American Economic Association, vol. 88(3), pages 478-94, June.
  26. Richard A. Brecher, 1974. "Minimum Wage Rates and the Pure Theory of International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 88(1), pages 98-116.
  27. Zoltan Acs & Nicola Virgill, 2009. "Entrepreneurship in Developing Countries," Jena Economic Research Papers 2009-023, Friedrich-Schiller-University Jena.
  28. Daron Acemoglu & James A. Robinson, 2014. "The Rise and Decline of General Laws of Capitalism," NBER Working Papers 20766, National Bureau of Economic Research, Inc.
  29. Daniel M. Bernhofen & John C. Brown, 2005. "An Empirical Assessment of the Comparative Advantage Gains from Trade: Evidence from Japan," American Economic Review, American Economic Association, vol. 95(1), pages 208-225, March.
  30. Jonathan Haskel & Robert Z. Lawrence & Edward E. Leamer & Matthew J. Slaughter, 2012. "Globalization and U.S. Wages: Modifying Classic Theory to Explain Recent Facts," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 119-40, Spring.
  31. Bulent Unel, 2013. "The Interaction Between Technology Adoption and Trade When Firms are Heterogeneous," Review of International Economics, Wiley Blackwell, vol. 21(4), pages 797-808, 09.
  32. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
  33. Thomas Piketty & Emmanuel Saez, 2014. "Inequality in the long run," PSE - Labex "OSE-Ouvrir la Science Economique" halshs-01053609, HAL.
  34. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
  35. Davidson, Carl & Martin, Lawrence & Matusz, Steven, 1999. "Trade and search generated unemployment," Journal of International Economics, Elsevier, vol. 48(2), pages 271-299, August.
  36. Xavier Gabaix & Augustin Landier, 2006. "Why Has CEO Pay Increased So Much?," 2006 Meeting Papers 518, Society for Economic Dynamics.
  37. Charles I. Jones, 2015. "Pareto and Piketty: The Macroeconomics of Top Income and Wealth Inequality," Journal of Economic Perspectives, American Economic Association, vol. 29(1), pages 29-46, Winter.
  38. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  39. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-level Productivity…For Some Plants," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1051-1099.
  40. Kreickemeier, Udo & Nelson, Douglas, 2006. "Fair wages, unemployment and technological change in a global economy," Journal of International Economics, Elsevier, vol. 70(2), pages 451-469, December.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:lsu:lsuwpp:2013-04. 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: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.