Wage inequality, skill‐specific unemployment and trade liberalization

Labour market outcomes of trade liberalization are at the heart of the policy debate. In this model, the long‐run effects of trade liberalization and trade‐induced skill‐biased technological change on wage inequality and unemployment are studied by augmenting a heterogeneous firm trade model with job search and unemployment. In the model, there are two types of workers— skilled and unskilled —and two types of technologies— low and high . Firms...