Promotional Information

The pathbreaking research synthesized in this volume shows that labor market frictions are central to understanding the distributional consequences of international trade. Anyone interested in the intellectual debate about globalization should read this book. It is an essential reference for researchers and students in international trade. -- Stephen J. Redding, London School of Economics and Political Science Davidson and Matusz pioneered the modern theory of international trade with labor market frictions. This book knits together their major work on this subject, and delivers fundamental insights concerning the effects of globalization on unemployment patterns, wage distributions, adjustment burdens, intergenerational welfare gaps, and trade policy formation. Any serious study of this literature should begin with this volume. -- James R. Tybout, Pennsylvania State University This is an important and timely volume. The quality of scholarship in these papers is of a consistently high standard, and readers will not only find the individual papers analytically rich but also accessible. The economics profession has finally recognized just what a central issue trade with unemployment is--Davidson and Matusz recognized it twenty years ago and have been building tractable models that have yielded important insights. -- David Greenaway, University of Nottingham

Table of Contents

PREFACE ix ACKNOWLEDGMENTS xv CHAPTER 1: Our Motivation 1 PART 1: NEW INSIGHTS FROM "OLD" TRADE THEORY 25 Introduction to Part 1 27 CHAPTER 2: The Structure of Simple General Equilibrium Models with Frictional Unemployment 33 CHAPTER 3: Trade and Search-Generated Unemployment 60 PART 2: COMPLICATIONS 91 Introduction to Part 2 93 CHAPTER 4: Multiple Free Trade Equilibria in Micro Models of Unemployment 97 CHAPTER 5: Jobs and Chocolate: Samuelsonian Surpluses in Dynamic Models of Unemployment 110 CHAPTER 6: Long-Run Lunacy, Short-Run Sanity: A Simple Model of Trade with Labor Market Turnover 138 PART 3: EMPIRICS 159 Introduction to Part 3 161 CHAPTER 7: Trade and Turnover: Theory and Evidence 165 CHAPTER 8: Trade, Turnover, and Tithing 195 PART 4: ADJUSTMENT COSTS AND POLICY ISSUES 221 Introduction to Part 4 223 CHAPTER 9: Should Policy Makers Be Concerned about Adjustment Costs? 227 CHAPTER 10: An Overlapping-Generations Model of Escape Clause Protection 265 CHAPTER 11: Trade Liberalization and Compensation 292 CHAPTER 12: Can Compensation Save Free Trade? 321 PART 5: NEW INSIGHTS FROM "NEW" TRADE THEORY 349 Introduction to Part 5 351 CHAPTER 13: Globalization and Firm-Level Adjustment with Imperfect Labor Markets 355 CHAPTER 14: Outsourcing Peter to Pay Paul: High-Skill Expectations and Low-Skill Wages with Imperfect Labor Markets 388 INDEX 407

About the Author

Carl Davidson is professor of economics and chair of the Department of Economics at Michigan State University. Steven J. Matusz is professor of economics at Michigan State. They are the authors of "International Trade and Labor Markets: Theory, Evidence, and Policy Implications".

Reviews

"The pathbreaking research synthesized in this volume shows that labor market frictions are central to understanding the distributional consequences of international trade. Anyone interested in the intellectual debate about globalization should read this book. It is an essential reference for researchers and students in international trade."—Stephen J. Redding, London School of Economics and Political Science

"Davidson and Matusz pioneered the modern theory of international trade with labor market frictions. This book knits together their major work on this subject, and delivers fundamental insights concerning the effects of globalization on unemployment patterns, wage distributions, adjustment burdens, intergenerational welfare gaps, and trade policy formation. Any serious study of this literature should begin with this volume."—James R. Tybout, Pennsylvania State University

"This is an important and timely volume. The quality of scholarship in these papers is of a consistently high standard, and readers will not only find the individual papers analytically rich but also accessible. The economics profession has finally recognized just what a central issue trade with unemployment is—Davidson and Matusz recognized it twenty years ago and have been building tractable models that have yielded important insights."—David Greenaway, University of Nottingham