Publication

This paper introduces unemployment and endogenous selection of workers into different skill-classes in a trade model with two sectors and heterogeneous firms. This allows the authors to study the distributional consequences and the skill-specific unemployment effects of trade liberalization. They show that the gains from trade will be distributed very unequally. While unskilled workers loose in terms of real wages and employment levels in the skilled labor intensive sector, skilled workers loose in terms of real wages and unemployment levels in the unskilled labor intensive sector.