Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality
Recent research has emphasized firm heterogeneity as a source of comparative advantage. Combining this approach with labor market frictions and worker heterogeneity provides a framework for studying the impact of trade on unemployment and inequality. This paper reviews this approach and reports a number of results from recent studies.
I thank Oleg Itskhoki and Stephen Redding for comments, Jane Trahan for editorial assistance, and the National Science Foundation for financial support. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
E.Helpman, Labor market frictions as a source of comparative advantage: implications for unemploy- ment and inequality, in Robert M. Solow and Jean-Philippe Tou§ut (eds.), The Shape of the Division of Labour: Nations, Industries and Households (Cheltenham: Edward Elgar Publishing), 2010.