Trade shocks and labor adjustment : theory / Stephen Cameron, Shubham Chaudhuri, John McLaren
- Cameron, Stephen V.
- Cambridge, Mass. : National Bureau of Economic Research, 
- Copyright Date:
- Physical Description:
- 45 pages : illustrations ; 22 cm.
- Additional Creators:
- Chaudhuri, Shubham, McLaren, John, 1962-, and National Bureau of Economic Research
Full Text available online
- NBER working paper series ; working paper no. 13463
- "We construct a dynamic, stochastic rational expectations model of labor reallocation within a trade model that is designed so that its key parameters can be estimated for trade policy analysis. A key feature is the presence of time-varying idiosyncratic moving costs faced by workers. As a consequence of these shocks: (i) Gross flows exceed net flows (an important feature of empirical labor movements); (ii) the economy features gradual and anticipatory adjustment to aggregate shocks; (iii) wage differentials across locations or industries can persist in the steady state; and (iv) the normative implications of policy can be very different from a model without idiosyncratic shocks, even when the aggregate behaviour of both models is similar. It is shown that the equilibrium solves a particular planner's problem, thus facilitating analytical results, econometric estimation, and simulation of the model for policy analysis"--National Bureau of Economic Research web site.
- "October 2007."
- Bibliography Note:
- Includes bibliographical references (pages 42-45).
- Other Forms:
- Also available in PDF from the NBER World Wide Web site (www.nber.org).
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