Comparative Advantage and the Equilibrium Rate of Unemployment
This paper develops a two-country Heckscher-Ohlin model with endogenous equilibrium involuntary unemployment to examine the question: What is the effect of free trade on the equilibrium rates of unemployment in the labor abundant and labor-scarce countries? It is shown that free trade leads to a dec...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
1991
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| Online Access: | https://ink.library.smu.edu.sg/soe_research/174 https://ink.library.smu.edu.sg/context/soe_research/article/1173/viewcontent/ComparativeAdvEquilRateUnemployment_1991.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | This paper develops a two-country Heckscher-Ohlin model with endogenous equilibrium involuntary unemployment to examine the question: What is the effect of free trade on the equilibrium rates of unemployment in the labor abundant and labor-scarce countries? It is shown that free trade leads to a decline in the equilibrium rate of unemployment in the labor-abundant country but to a rise in unemployment in the labor-scarce country. |
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