DP7707 | Labor Market Frictions as a Source of Comparative Advantage, with Implications for Unemployment and Inequality

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21/02/2010

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Abstract

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.