Trade and frictional unemployment in the global economy

Frederic Robert-Nicoud, Carrère, Céline and Anja Grujovic-Vischer
Authors registered in the RePEc Author Service: Celine Carrere

No 10692, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a multi-country, multi-sector trade model featuring risk-averse workers, labor market frictions, unemployment beneï¬ ts, and equilibrium unemployment. Trade opening leads to a reduction in unemployment when it simultaneously raises welfare and reallocates labor towards sectors with lower-than-average labor market frictions. We then estimate and calibrate the model using employment data from 31 OECD countries and worldwide trade data. Finally, we quantify the potential unemployment, real wage, and welfare effects of repealing NAFTA and raising bilateral tariffs between the US and Mexico to 20 percent. This policy would increase unemployment by 2.4 percent in the us and 48 percent in Mexico.

Keywords: Labor market frictions; Unemployment; Trade (search for similar items in EconPapers)
JEL-codes: F15 F16 F17 (search for similar items in EconPapers)
Date: 2019-07
New Economics Papers: this item is included in nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (20)

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Related works:
Journal Article: Trade and Frictional Unemployment in the Global Economy (2020)
Working Paper: Trade and Frictional Unemployment in the Global Economy (2015)
Working Paper: Trade and frictional unemployment in the global economy (2015)
Working Paper: Trade and frictional unemployment in the global economy (2015)
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