Unemployment of Skilled and Unskilled Labor in an Open Economy: International Trade, Migration, and Outsourcing

No 08-07, Carleton Economic Papers from Carleton University, Department of Economics

Abstract: We show how international trade, migration and outsourcing affect unemployment of skilled and unskilled labor, in a framework that integrates the Heckscher-Ohlin model of trade with the Shapiro-Stiglitz model of unemployment. Our approach allows us to analyze changes in not only aggregate unemployment, but also the distribution of unemployment between skilled and unskilled labor. As the analysis demonstrates, the unemployment rates of these two types of labor often move in opposite directions, thereby dampening the change in aggregate unemployment. Results depend on the source of comparative advantage, based on international differences in (for example) unemployment insurance or production technology.

Pages: 27 pages
Date: 2008-09, Revised 2010-11
New Economics Papers: this item is included in nep-int, nep-lab, nep-ltv and nep-mig
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Citations: View citations in EconPapers (18)

Published: Revised version in Review of International Economics, Vol. 18, No. 5 (November 2010), pp. 990-1000

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Journal Article: Unemployment of Skilled and Unskilled Labor in an Open Economy: International Trade, Migration, and Outsourcing (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:car:carecp:08-07

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