Trade-Induced Job Turnover and Unemployment
- Author
- Firooz, Hamid
- Published
- [University Park, Pennsylvania] : Pennsylvania State University, 2019.
- Physical Description
- 1 electronic document
- Additional Creators
- Tybout, James R., 1953-
Access Online
- etda.libraries.psu.edu , Connect to this object online.
- Graduate Program
- Restrictions on Access
- Restricted (Penn State Only).
- Summary
- This dissertation develops and estimates an open economy dynamic general equilibrium model to introduce and quantify a new mechanism through which openness influences productivity. The model features matching frictions in the labor market and endogenous demand elasticities in product markets. Because openness affects demand elasticities, it influences productivitythrough several channels. First, higher demand elasticities make firms'employment decisions more responsive to their idiosyncratic productivityshocks. This causes aggregate job turnover to rise, and thereby tends toraise unemployment. Second, this same increase in job turnover meansthat workers are moved more frequently from less to more efficient firms.Finally, to the extent that openness reduces the cross-firm dispersion inmarkups, it likewise tends to reduce the distortionary wedges between firms'marginal revenue products.Counterfactual analysis quantifies these trade-induced impacts on job turnover, unemployment, and labor misallocation. I show that a 10 percentage point reduction in import tariffs combined with a 12 percent reduction in the iceberg trade cost raises jobturnover and unemployment (in steady state) by roughly 7 and 12 percent,respectively. These effects would be almost four times smaller ifdemand elasticities were not allowed to respond to openness.
- Other Subject(s)
- Genre(s)
- Dissertation Note
- Ph.D. Pennsylvania State University 2019.
- Technical Details
- The full text of the dissertation is available as an Adobe Acrobat .pdf file ; Adobe Acrobat Reader required to view the file.
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