NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Comparative Advantage and Unemployment

Mark Bils, Yongsung Chang, Sun-Bin Kim

NBER Working Paper No. 15030
Issued in June 2009
NBER Program(s):   EFG

We model unemployment allowing workers to differ by comparative advantage in market work. Workers with comparative advantage are identified by who works more hours when employed. This enables us to test the model by grouping workers based on their long-term wages and hours from panel data. The model captures the greater cyclicality of employment for workers with low comparative advantage. But the model fails to explain the magnitude of countercyclical separations for high-wage workers or the magnitude of procyclical findings for high-hours workers. As a result, it only captures the cyclicality of the extensive, employment margin for low-wage, low-hours workers.

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Document Object Identifier (DOI): 10.3386/w15030

Published: Bils, Mark & Chang, Yongsung & Kim, Sun-Bin, 2012. "Comparative advantage and unemployment," Journal of Monetary Economics, Elsevier, vol. 59(2), pages 150-165.

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