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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 […]

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Trade in Unemployment

Authors: Céline CARRERE, Marco FUGAZZA, Marcelo OLARREAGA, and Fréderic ROBERT-NICOUD 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 […]