Samuelson, Mortensen, and Melitz walk into a chocolate bar: A tale of jobs, inter‐generational conflict, and international trade

Carl Davidson and Steven Matusz

Review of International Economics, 2025, vol. 33, issue 1, 4-32

Abstract: We bring together three prominent literatures to show how jobs create an intergenerational externality. Employment acts as an asset, allowing current generations to borrow from future generations. The competitive equilibrium is not Pareto efficient, and the policies preferred by the current generation differ from the policies that maximize the welfare of future generations. We illustrate with an application to international trade.

Date: 2025
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