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Synopsis While most standard economic models of international trade assume full employment, Carl Davidson and Steven Matusz have argued over the past two decades that this reliance on full-employment modeling is misleading and ill-equipped to tackle many important trade-related questions. Matusz W.

Comparative advantage specialization and gains from trade - Microeconomics - Khan Academy

Upjohn Institute for Employment Research, Read preview Overview. Conditional on having the same observed trade share, a labor-abundant country with inefficiently high unemployment have extra welfare gains from international trade. Finally and importantly, when the labor market in a small open economy generates inefficiently high equilibrium unemployment, the optimal trade policy is to raise the domestic price of its labor-intensive goods an import tariff in a capital-abundant country and an export subsidy in a labor-abundant country.

Free trade is optimal only when a labor market is initially efficient.

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Trade and Minimum Wages in General Equilibrium: Theory and Evidence

The model predictions are supported by patterns of tariffs in WTO member countries. VERY timely paper on a topic that economists are thought to have wide agreement on, perhaps wrongly. I am looking forward to the literature this paper will spawn. This entry was posted on Friday, May 13th, at pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.

International Trade with Equilibrium Unemployment - Semantic Scholar

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The Cyclical Behavior of Equilibrium Unemployment and Vacancies in the US and Europe

Journal home Journal issue About the journal. Keywords: International trade , Public goods , Search , Unemployment. Published: received: - Released: June 01, accepted: - [Advance Publication] Released: - corrected: - Correction information Date of correction: September 13, Reason for correction: - Correction: Article Details: The files for full-text search had revised on Studies in Regional Sciences, all issues of vol. Article overview. References