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A North–South model of trade with search unemployment

Ignat Stepanok

European Economic Review, 2018, vol. 101, issue C, 546-566

Abstract: In this paper I build a North–South model of international trade, economic growth and search-frictional unemployment in the North. Growth is driven by a process of creative destruction in the North followed by imitation in the South. I study the effects of intellectual property rights protection and trade liberalization on unemployment and welfare in the North. Intellectual property rights protection decreases unemployment and increases welfare. Trade liberalization increases welfare but has an ambiguous effect on unemployment. It decreases unemployment if workers in the North have a high outside option and increases it if their outside option is low. I provide empirical evidence in support of the last result using data for 20 OECD countries.

Keywords: Creative destruction; Search unemployment; Trade liberalization; Intellectual property rights; North–South trade (search for similar items in EconPapers)
JEL-codes: F12 F16 F43 J63 O31 O34 (search for similar items in EconPapers)
Date: 2018
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