Inequality and unemployment in a global economy

Elhanan Helpman, Oleg Itshoki and Stephen Redding

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper develops a new framework for examining the distributional consequences of international trade that incorporates firm and worker heterogeneity, search and matching frictions in the labor market, and screening of workers by firms. Larger firms pay higher wages and exporters pay higher wages than non-exporters. The opening of trade enhances wage inequality and raises unemployment, but expected welfare gains are ensured if workers are risk neutral. And while wage inequality is larger in a trade equilibrium than in autarky, reductions of trade impediments can either raise or reduce wage inequality.

JEL-codes: E24 F12 F16 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2009-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://eprints.lse.ac.uk/25501/ Open access version. (application/pdf)

Related works:
Journal Article: Inequality and Unemployment in a Global Economy (2010)
Working Paper: Inequality and Unemployment in a Global Economy (2010)
Working Paper: Inequality and Unemployment in a Global Economy (2009)
Working Paper: Inequality and Unemployment in a Global Economy (2009)
Working Paper: Inequality and Unemployment in a Global Economy (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:25501

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