Trade and frictional unemployment in the global economy

Authors: Frédéric Robert-Nicoud, Céline Carrère, Anja Grujovic We develop a multi-country, multi-sector trade model with labor market frictions and equilibrium unemployment. Trade opening leads to a reduction in unemployment if it raises real wages and reallocates labor towards sectors with lower-than-average labor market frictions. We estimate sector-specific labor market frictions and trade elasticities using employment data from […]