Comparative Advantage and Unemployment

Mark Joseph Bils, Yongsung Chang () and Kim, Sun-Bin ()
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Kim, Sun-Bin: Department of Economics, Korea University

No 547, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: We model unemployment allowing workers to differ by comparative advantage in market work. Workers with comparative advantage are identified by who works more hours when employed. This enables us to test the model by grouping workers based on their long-term wages and hours from panel data. The model captures the greater cyclicality of employment for workers with low comparative advantage. But the model fails to explain the magnitude of countercyclical separations for high-wage workers or the magnitude of procyclical findings for high-hours workers. As a result, it only captures the cyclicality of the extensive, employment margin for low-wage, low-hours workers.

New Economics Papers: this item is included in nep-bec, nep-dge and nep-lab
Date: 2009-05
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Working Paper: Comparative Advantage and Unemployment (2009)
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