TY  - JOUR
AU  - Krishna,Kala
AU  - Mukhopadhyay,Abhiroop
AU  - Yavas,Cemile
TI  - Trade with Labor Market Distortions and Heterogeneous Labor: Why Trade Can Hurt
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9086
PY  - 2002
Y2  - July 2002
UR  - http://www.nber.org/papers/w9086
L1  - http://www.nber.org/papers/w9086.pdf
N1  - Author contact info:
Kala Krishna
Department of Economics
523 Kern Graduate Building
The Pennsylvania State University
University Park, PA 16802
Tel: 814/865-1106
Fax: 814/863-4775
E-Mail: kmk4@psu.edu

Abhiroop Mukhopadhyay
Indian Statistical Institute
E-Mail: abhiroop@isid.ac.in
AB  - This paper explains the differential impacts of trade on countries in terms of institutional differences which result in factor market distortions. We modify the Ricardian, Specific Factor and Hecksher Ohlin models of trade to capture these. Trade has both terms of trade effects and output effects. Both work to raise welfare in an undistorted economy. In a distorted economy, price effects work to improve welfare, while output effects work to reduce it. Large distorted countries are more likely to lose from trade as beneficial price effects are lower. In addition the greater the substitutability between goods, the more likely it is that welfare rises through trade.
ER  -