Publication: Delay and dynamics in labor market adjustment: simulation results
Program
KU-Authors
KU Authors
Co-Authors
Chaudhuri, Shubham
McLaren, John
Publication Date
Language
Type
Embargo Status
Journal Title
Journal ISSN
Volume Title
Alternative Title
Abstract
We simulate numerically a trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. Adjustment to a trade shock can be slow with plausible parameter values. In our base case, the economy moves 95% of the distance to the new steady state in approximately eight years. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build – or destroy – a constituency for free trade. We study the conditions under which these contrasting outcomes occur.
Source
Publisher
Elsevier
Subject
Economics
Citation
Has Part
Source
Journal of International Economics
Book Series Title
Edition
DOI
10.1016/j.jinteco.2007.11.003