Job creation, job destruction, and the international division of labour

Marion Jansen and Alessandro Turrini
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Marion Jansen: Pompeu Fabra University, Barcelona and Maxwell Stamp, London

No 1998064, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We incorporate equilibrium unemployment due to imperfect matching into a model of trade in intermediate inputs (Ethier (1982)). Firms are assumed to be price takers and their size is given by technology. Firms enter the market as long as expected profits cover the search cost they incur initially. Trade increases productivity in the final good and then demand for each intermediate input. Steady state unemployment is reduced after trade integration because more vacancies are opened. When the rate of job destruction is made endogenous, international trade reduces the equilibrium rate of jub destruction and this induces an indirect positive effect on job creation. We also show that the more volatile environment faced by firms that is often associated with deeper trade integration is unlikely, per-se, to increase unemployment.

Keywords: Job creation; job destruction; unemployment; international trade; increasing returns. (search for similar items in EconPapers)
Date: 1998-10-01
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Job Creation, Job Destruction, and the International Division of Labor (2004)
Working Paper: Job Creation, Job Destruction, and the International Division of Labour (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1998064

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