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Tuesday, June 07, 2016

The Dynamics of Labor Market Adjustment to Trade Liberalization

From Microeconomic Insights:

The dynamics of labor market adjustment to trade liberalization, by Rafael Dix-Carneiro: International trade theory has typically ignored the costs of adjusting to a change in trade policy, focusing instead on static models and long-run conclusions. However, adjustment costs are central to much of the controversy over trade liberalization. This work measures the importance of the dynamics of adjustment in shaping the distributional consequences of trade policy, and characterizes the time it takes for the economy to complete the transition to the new long-run equilibrium. When these adjustment costs are taken into account, the benefits of trade liberalization can be substantially smaller. ...

    Posted by on Tuesday, June 7, 2016 at 08:41 AM in Economics, International Trade, Unemployment | Permalink  Comments (21)


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