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Trade in Unemployment

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  • Carrère, Céline
  • Olarreaga, Marcelo
  • Robert-Nicoud, Frédéric

Abstract

We embed a model of the labor market with sector-specific search-and-matching frictions into a Ricardian model with a continuum of goods to show that trade liberalization causes higher unemployment in countries with comparative advantage in sectors with strong labor market frictions and leads to lower unemployment in countries with comparative advantage in sectors with weaklabor market frictions. We test this prediction in a panel dataset of 97 countries during the period 1995-2009 and find that the data supports the theoretical prediction. Our results also help reconciliate the apparently contradicting evidence in the empirical literature on the impact of trade on unemployment.

Suggested Citation

  • Carrère, Céline & Olarreaga, Marcelo & Robert-Nicoud, Frédéric, 2014. "Trade in Unemployment," Papers 712, World Trade Institute.
    • Handle: RePEc:wti:papers:712
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    Cited by:

    1. Carrère, Céline & Fugazza, Marco & Olarreaga, Marcelo & Robert-Nicoud, Frédéric, 2020. "Comparative advantage and equilibrium unemployment," European Economic Review, Elsevier, vol. 127(C).
    2. Francesco Di Comite & Antonella Nocco & Gianluca Orefice, 2018. "Trade liberalization and the wage gap: the role of vertical linkages and fixed costs," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 154(1), pages 75-115, February.
    3. Stephen T. Onifade & Ahmet Ay & Simplice A. Asongu & Festus V. Bekun, 2019. "Revisiting the Trade and Unemployment Nexus: Empirical Evidence from the Nigerian Economy," Research Africa Network Working Papers 19/079, Research Africa Network (RAN).
    4. Céline Carrère & Anja Grujovic & Frédéric Robert-Nicoud, 2020. "Trade and Frictional Unemployment in the Global Economy," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 2869-2921.
    5. Dinopoulos, Elias & Unel, Bulent, 2015. "Entrepreneurs, jobs, and trade," European Economic Review, Elsevier, vol. 79(C), pages 93-112.
    6. repec:gnv:wpaper:unige:77631 is not listed on IDEAS
    7. Kaung Myat Ko & Poomthan Rangkakulnuwat & Sasiwimon W. Paweenawat, 2015. "The Effect of International Trade on Labor Demand in ASEAN5," Economics Bulletin, AccessEcon, vol. 35(2), pages 1034-1041.
    8. van Neuss, Leif, 2018. "Globalization and deindustrialization in advanced countries," Structural Change and Economic Dynamics, Elsevier, vol. 45(C), pages 49-63.
    9. Anirudh SHINGAL & Pierre SAUVÉ, 2019. "The labour market effects of applied service regimes and service sector reforms," International Labour Review, International Labour Organization, vol. 158(1), pages 191-211, March.
    10. Häberli, Christian, 2015. "The International Regulatory Framework for National Employment Policies: Examples from Bangladesh, Ethiopia, Ghana, Madagascar, South Africa… (pdf)," Papers 862, World Trade Institute.
    11. Oliver Krebs, 2018. "Shocking Germany – A spatial analysis of German regional labor markets," Working Papers 183, Bavarian Graduate Program in Economics (BGPE).
    12. Julie Lochard, 2016. "Intégration et échanges internationaux : effets contemporains et persistants," Erudite HDR / Erudite Accreditation to supervise Ph.D., Erudite, number hd16-01 edited by Jean-François Jacques, April.
    13. Yolanda, 2017. "Impacts of Export Development on Unemployment in Indonesia," European Research Studies Journal, European Research Studies Journal, vol. 0(3A), pages 758-773.

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    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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