The Impact of Intra-Industry Trade on the Natural Rate of Unemployment in Two Simple Models

Publication Type

Journal Article

Publication Date

2003

Abstract

This paper builds in two popular versions of the theory of equilibrium unemployment into a world economy engaged purely in intraindustry trade of differentiated products. We show that free trade through increasing the range of varieties available for consumption and expanding economies of scale leads to a lowering of the equilibrium rates of unemployment in all participating countries. Thus, we demonstrate channels through which international trade alleviates the problem of high unemployment in each country engaged in pure intraindustry trade.

Discipline

Economics

Research Areas

Applied Microeconomics

Publication

Open Economies Review

Volume

5

Issue

1

First Page

348

Last Page

352

ISSN

0923-7992

Identifier

10.1007/bf01000743

Publisher

Kluwer

Additional URL

https://doi.org/10.1007/bf01000743

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