Econometrica Vol. 78 No. 4 2010
Inequality and Unemployment in a Global Economy
Abstract
This paper develops a new framework for examining the determinants of wage distributions that emphasizes within-industry reallocation, labor market frictions, and differences in workforce composition across firms. More productive firms pay higher wages and exporting increases the wage paid by a firm with a given productivity. The opening of trade enhances wage inequality and can either raise or reduce unemployment. While wage inequality is higher in a trade equilibrium than in autarky, gradual trade liberalization first increases and later decreases inequality.
- DOI
- 10.3982/ecta8640
- Volume
- 78
- Issue
- 4
- Pages
- 1239-1283
- Language
- en
- Sources
- bibtex:phds-export.bib openalex openalex crossref