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Creative destruction and unemployment in an open economy model

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  • Stepanok, Ignat

Abstract

I develop a model of endogenous economic growth and search and matching frictions in the labor market. I study the effect of trade liberalization between two identical economies on unemployment. I solve for two versions of the growth model, the first one where trade liberalization has only a temporary effect on growth, a semi-endogenous growth model. In the second version trade liberalization has a permanent effect on growth, a fully endogenous growth model. I show that in both versions trade liberalization has a steady state effect on unemployment that can be either negative or positive depending on parameters.

Suggested Citation

  • Stepanok, Ignat, 2013. "Creative destruction and unemployment in an open economy model," Kiel Working Papers 1820, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1820
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    Cited by:

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    2. Davis, Colin & Hashimoto, Ken-ichi, 2022. "Productivity growth, industry location patterns and labor market frictions," Regional Science and Urban Economics, Elsevier, vol. 97(C).
    3. Stepanok, Ignat, 2018. "A North–South model of trade with search unemployment," European Economic Review, Elsevier, vol. 101(C), pages 546-566.
    4. Ignat Stepanok, 2023. "FDI and unemployment, a growth perspective," Review of International Economics, Wiley Blackwell, vol. 31(2), pages 761-783, May.
    5. Finn Martensen, 2013. "Globalization, Unemployment, and Product Cycles: Short- and Long-Run Effects," Working Paper Series of the Department of Economics, University of Konstanz 2013-16, Department of Economics, University of Konstanz.
    6. Buhari Doğan, 2016. "The Effects of Globalization on Employment: Bounds Test Approach in Turkey Sample," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(10), pages 620-633, October.
    7. Grieben, Wolf-Heimo & Şener, Fuat, 2017. "Wage bargaining, trade and growth," Research in Economics, Elsevier, vol. 71(3), pages 564-587.
    8. Ramesh Chandra Das & Kamal Ray, 2020. "Does Globalisation Influence Employment? Empirical Investigation on Individual as well as Panel of South Asian Countries," Review of Market Integration, India Development Foundation, vol. 12(1-2), pages 7-34, August.

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    More about this item

    Keywords

    creative destruction; unemployment; trade liberalization;
    All these keywords.

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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