International Trade and Unemployment—the Worker‐selection Effect

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract This paper analyzes how trade liberalization in ‡uences the unemployment rate of workers with di¤erent abilities. We re…ne the Melitz (2003) framework to account for trade unions and heterogeneous workers, who di¤er with respect to their abilities. Our main …ndings are: (i) highability workers pro…t from trade liberalization in terms of higher wages and higher employment; (ii) the least e¢ cient workers loose their job and switch to long-term unemployment (worker-selection e¤ect); (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 country's welfare. JEL-Classi…cation: F1, F16, J5 Terms of use: Documents in

Redistribution of Trade Gains in the Presence of Firm and Worker Heterogeneity

“…In accordance with Helpman et al. (, ) and de Pinto and Michaelis (), we find that on average, high‐productive firms employ high‐ability workers, while low‐ability workers are matched to low‐productive firms. An increase in the profit tax leads to a higher share of low‐productive firms, as explained above, at which low‐ability workers are hired.…”

“…Our model builds on the Melitz () framework and its extension to trade unions and heterogeneous workers by de Pinto and Michaelis (). We consider an open economy setting with two symmetric countries.…”

“…The determination of employment and wages at the firm level is modelled as a five‐stage game (see de Pinto and Michaelis, , for the same approach). In the first stage, firms discover their productivity and decide whether to enter the domestic market or not, and additionally, whether to export varieties abroad or not.…”

“…Our modelling approach is based on a recent study by de Pinto and Michaelis (). In this paper, the authors investigate the employment and wage effects of trade liberalisation on low‐ability workers.…”

International Trade and Unemployment: On the Redistribution of Trade Gains When Firms Matter by Marco de Pinto Berlin, Heidelberg: Physica-Verlag (Springer), 2012

“…The book is essentially a text of the author's doctoral dissertation finalized in 2012 at the Faculty of Economics and Management of the University of Kassel in Germany, with Chapter 2 being written jointly with the thesis supervisor Professor Jochen Michaelis and also published elsewhere in its improved form (de Pinto, 2014). The book is essentially a text of the author's doctoral dissertation finalized in 2012 at the Faculty of Economics and Management of the University of Kassel in Germany, with Chapter 2 being written jointly with the thesis supervisor Professor Jochen Michaelis and also published elsewhere in its improved form (de Pinto, 2014).…”