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International Trade and Unemployment - the Worker-Selection Effect

Marco de Pinto () and Jochen Michaelis
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Marco de Pinto: University of Kassel

No 201127, MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: This paper analyzes how trade liberalization influences the unemployment rate of workers with different abilities. We refine the Melitz (2003) framework to account for trade unions and heterogeneous workers, who differ with respect to their abilities. Our main ?findings are: (i) high ability workers profit from trade liberalization in terms of higher wages and higher employment; (ii) the least efficient workers loose their job and switch to long-term unemployment (worker-selection effect); (iii) if a country is endowed with a large fraction of low-skilled workers, trade liberalization leads to a rise in aggregate unemployment. In this case, trade liberalization may harm a countrys welfare.

Keywords: trade liberalization; trade unions; skill-specific unemployment (search for similar items in EconPapers)
JEL-codes: F1 F16 J5 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011
New Economics Papers: this item is included in nep-hrm, nep-int and nep-lab
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https://www.uni-marburg.de/en/fb02/research-groups ... 7-2011_michaelis.pdf First version, 2011 (application/pdf)

Related works:
Journal Article: International Trade and Unemployment—the Worker-selection Effect (2014) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201127

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