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On-the-job-search, wage dispersion and trade liberalization

Joel Rodrigue () and Kunio Tsuyuhara

Canadian Journal of Economics, 2018, vol. 51, issue 2, 452-482

Abstract: This paper builds a dynamic, general equilibrium, open economy model that allows for ex ante homogeneous workers to experience different wage growth before and after trade liberalization. Key features of our model include a product market composed of heterogeneous firms and a labour market characterized by directed, on-the-job-search and dynamic contracts. We characterize the complementarity of these two sources of wage dispersion in an open economy setting where trade liberalization affects the endogenous equilibrium set of producers and the structure of wages. We find that worker job-to-job transitions, through on-the-job search, increases the impact of trade liberalization on wage dispersion by 4%.

JEL-codes: F16 (search for similar items in EconPapers)
Date: 2018
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