Inequality and Unemployment in a Global Economy

Elhanan Helpman, Oleg Itskhoki and Stephen Redding

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper develops a new framework for examining the distributional consequences of international trade that incorporates firm and worker heterogeneity, search and matching frictions in the labor market, and screening of workers by firms. Larger firms pay higher wages and exporters pay higher wages than non-exporters. The opening of trade enhances wage inequality and raises unemployment, but expected welfare gains are ensured if workers are risk neutral. And while wage inequality is larger in a trade equilibrium than in autarky, reductions of trade impediments can either raise or reduce wage inequality.

Keywords: Wage Inequality; International Trade; Risk; Unemployment (search for similar items in EconPapers)
JEL-codes: E24 F12 F16 (search for similar items in EconPapers)
Date: 2009-07
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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https://cep.lse.ac.uk/pubs/download/dp0940.pdf (application/pdf)

Related works:
Journal Article: Inequality and Unemployment in a Global Economy (2010)
Working Paper: Inequality and Unemployment in a Global Economy (2010)
Working Paper: Inequality and Unemployment in a Global Economy (2009)
Working Paper: Inequality and unemployment in a global economy (2009)
Working Paper: Inequality and Unemployment in a Global Economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp0940

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