The declining costs of international trade and unemployment

John Francis

Journal of International Trade & Economic Development, 2003, vol. 12, issue 4, pages 337-357

Abstract: A two-country, two-sector new geography model where workers are imperfectly monitored is used to examine the relationship between falling trade costs and unemployment. It is shown that as trade costs fall over time the world naturally falls into an industrialized core and an agricultural periphery. Globalization has a positive effect on employment in the core in both the short and long term. The periphery suffers employment losses in the short term but can gain in the long term.

Keywords: Agglomeration; Economic Geography; Efficiency Wages; International Trade (search for similar items in EconPapers)
Date: 2003
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