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Inequality and unemployment in a global economy

Author: Elhanan Helpman; Oleg Itskhoki; Stephen Redding; National Bureau of Economic Research.
Publisher: Cambridge, Mass. : National Bureau of Economic Research, ©2008.
Series: Working paper series (National Bureau of Economic Research), no. 14478.
Edition/Format:   eBook : Document : EnglishView all editions and formats
Database:WorldCat
Summary:
This paper develops a new framework for examining the distributional consequences of trade liberalization that is consistent with increasing inequality in every country, growth in residual wage inequality, rising unemployment, and reallocation within and between industries. While the opening of trade yields welfare gains, unemployment and inequality within sectors are higher in the trade equilibrium than in the  Read more...
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Material Type: Document, Internet resource
Document Type: Internet Resource, Computer File
All Authors / Contributors: Elhanan Helpman; Oleg Itskhoki; Stephen Redding; National Bureau of Economic Research.
OCLC Number: 271651075
Notes: "November 2008."
Description: 1 online resource (57 pages) : illustrations, digital.
Series Title: Working paper series (National Bureau of Economic Research), no. 14478.
Responsibility: Elhanan Helpman, Oleg Itskhoki, Stephen Redding.

Abstract:

This paper develops a new framework for examining the distributional consequences of trade liberalization that is consistent with increasing inequality in every country, growth in residual wage inequality, rising unemployment, and reallocation within and between industries. While the opening of trade yields welfare gains, unemployment and inequality within sectors are higher in the trade equilibrium than in the closed economy. In the open economy changes in trade openness have nonmonotonic effects on unemployment and inequality within sectors. As aggregate unemployment and inequality have within- and between-sector components, changes in sector composition following the opening of trade complicate its impact on aggregate unemployment and inequality. However, when countries are nearly symmetric, the sectoral composition effects reinforce the within-sector effects, and both aggregate inequality and aggregate unemployment rise with trade liberalization.

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